Will Paying a Charge-Off Improve Your Credit Score?

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A charge-off is one of the worst things that can happen to your credit score because it indicates a serious payment issue. This type of derogatory credit report listing is the result of missing your payments on a debt for a time period that's generally between 120 and 180 days.

After this period of missed payments, the creditor declares your account a loss and writes it off as uncollectible from an accounting standpoint. Your account will be closed for any new charges, however, you still owe the balance. The creditor will continue to make collection attempts on the past due balance and may even enlist the help of a third-party debt collector.

What Happens When You Pay a Charge-Off?

If you pay a charge-off, you may expect your credit score to go up right away since you've cleared up the past due balance. Unfortunately, it’s not that easy.

Paying a charge-off doesn’t remove the account from your credit report. That's because clearing up the past due balance doesn’t erase the fact that your account was actually charged-off. Paying a charge-off also will not improve your credit score – at least not immediately.

Over time, your credit score can improve after a charge-off if you continue paying all your other accounts on time and handle your debt responsibly. However, if you’re late again or you have another account charged-off (or something worse like a foreclosure or repossession), your credit score may drop even lower and can take longer to recover.

The charge-off will eventually fall off your credit report whether you pay it or not. The credit reporting time limit for charge-offs runs out after seven years and 180 days from the date of the first delinquency that led to your account being charged-off.


If a charge-off is still listed on your credit report after the credit reporting time limit, you can file a dispute with the credit bureaus to have it removed.

The Benefit of Paying Your Charge-Off

Most people would only pay a charge-off if it meant they'd receive a subsequent increase in their credit score. You may be less inclined to pay your charge-off considering you probably won’t see an instant credit score boost. Even so, there other good reasons to pay your a charge-off.

For one, paying a charge-off makes you look better when you apply for credit. Lenders, creditors, and other businesses are less likely to approve an application as long as you have outstanding past due balances on your credit report. It sends the message that you may not pay any new accounts either. Once you pay the charge-off, you improve your odds of having your applications approved.

Paying a charged-off balance also reduces your overall debt, which could boost your credit score, since 30% of your score is based on the amount of debt you're carrying.

Negotiating a Pay for Delete

You may be able to remove the charge-off by negotiating a pay for delete with the credit or debt collector. A pay for delete involves offering to pay the account in full in exchange for having it removed from your credit report.

You can explain to your creditor the circumstances that led to you delinquency and ask that for a pay for delete. If you can negotiate a pay for delete (it can be a long shot), you’re more likely to see an increase in your credit score after the item is removed from your credit report.


Creditors are not required to remove accurate, timely reported accounts from your credit report, even if you pay in full.

How To Avoid a Charge-Off

Knowing the timing of a charge-off puts you in a better position to avoid such a serious delinquency. With each missed payment it gets harder to catch up again with fees and interest added to your balance due. If you fall behind, get caught up on any missed payments as quickly as possible.

If you foresee problems making your credit card payment, contact your credit card issuer sooner rather than later. You may be able to make a payment arrangement that would allow you to avoid a charge-off. Or, if you're having financial trouble, your credit card issuer may allow you to enter a hardship payment plan with reduced monthly payments.

Frequently Asked Questions (FAQs)

Could I settle my charge-off, or is it better to pay in full?

It is always better to pay off a debt in full, which also applies to charge-offs. On your credit report, the charge-off will be marked as "settled" rather than "paid in full," which sends a different message to potential lenders.

Is a charge-off worse than the debt going to collections?

Once your unpaid charge-off goes to collections, the incident will appear on your credit report twice, further hurting your score. Talking with the creditor and paying a charge-off can stop it from going to collections, preventing both from impacting your score. Often, lenders will be more forgiving if they see that these have been paid in full.

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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. Equifax. "What Is a Charge-Off?"

  2. Experian. "What Does 'Charge-Off' Mean on a Credit Report?"

  3. Experian. "Can a Paid Charged Off Account Be Removed From the Report?"

  4. Federal Trade Commission Consumer Information. "Fair Credit Reporting Act § 605. Requirements Relating to Information Contained in Consumer Reports," Page 22.

  5. Federal Trade Commission Consumer Information. "Disputing Errors on Credit Reports."

  6. MyFico. "What Is Amounts Owed?"

  7. Lexington Law. "Pay for Delete Letter Template for Credit Repair."

  8. Consumer Financial Protection Bureau. "Is It Possible to Remove Accurate, Negative Information From My Credit Report?"

  9. Experian. "Is It Better To Pay Off Debt or Settle It?"

  10. Experian. "What Is a Charge-Off?"

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