A charge off is no different from a creditor thinking that you will never repay your debt and so they call off the debt collector. When one of your accounts is charged off, you will have a less than stellar credit score which can wreck much havoc in your financial life.
However, a low credit rating does not have to hold you down forever. Even after a charge-off, you can still fix your credit rating, though it’s a long and slow process.
There are certain things you need to do in order to improve your credit rating as quickly as possible.
1) Get new credit in your name
The best thing you can do in case all your other accounts have been charged off or sent to collection is to get a new secured card. This is a better option because you may not get approved for a regular card. Ensure you manage the account properly, and you will get your money back when you close the account.
2) Pay all your other credit cards and loans on time.
Late payments drastically reduce your credit scores. The best way to rebuild your credit in an event of a charge off is to get positive information on your credit report. From credit cards to utility bills, timely payments is a good financial habit. You can set your bills on autopay or set automatic payment reminders by email or text message so that you don’t forget.
3) Establish good credit practices
Another good way of improving your credit is to adopt good credit practices. Refrain from actions such as spending up to the limit, charging more than you are capable of paying off, paying the minimum balance only and many more. Instead, consider paying of your balance in full on a monthly basis and spend about 50 percent of your credit limit.
You can as well open a new credit account and make payments on it while maintaining proper utilization ratios. Keep accruing more positive accounts and within no time, the effects on your negative accounts will diminish. Having positive accounts reporting greatly improves your credit.
4) Dispute wrongly reported collections or charge-offs right away
You have to make sure all your accounts are reporting correctly and that all the accounts that are reported belong to you. Don’t take too long to dispute any erroneous data. It is advisable to send a letter to the credit bureau and wait for a response as opposed to filling an online dispute.
5) You can send a goodwill letter
If you have already settled the account, a goodwill letter is similar to a pay for delete letter, but instead you can request that the creditor to remove the account from your credit report out of goodwill.
6) Avoid applying for too much credit
When you are trying to rebuild your credit after a charge off, it’s not a good idea to apply for too many credit cards. Instead one or two cards are enough.
Credit repair is not a process that will happen overnight. It take patience. The motto should always be to stay away from late payments and keep your debts at manageable levels and you could save big money for years to come. To learn more about charge offs and how to deal with them click here.