What Are Charge-off Accounts?

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If an individual falls behind for 30 days on a credit card, line of credit or non-collateralized installment agreement the creditor will report a 30 late payment on the credit report. However, if a payment is not made for the duration of 180 days, the creditor will report the account as a charge-off. A newly incurred charge-off is an account that impacts the score very negatively, in cases where it is the only negative account on the credit report, a perfect credit score may be reduced by as much as 100 points. In this scenario, a consumer may see their pre-existing credit line limits cut, when his/her creditors access the account for an annual review and see a charge-off on a credit report.

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