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Charged of Credit Cards

Established Contributor

Charged of Credit Cards

I have 2 charged off Credit Cards that have  been sent to a Collection Agency.   I get monthly credit reports from MyFico, on these reports both of those charged off accounts are showing up in my Credit Card UTI.  How and why? I thought that once it's charged off they have to report those balances are Zero and charged off.  Any help is appreciated.



Current as of 3/21/18 EQ 609 TU 619 EX 628
Discharge 7/2016 Ch 7 BK
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Community Leader
Super Contributor

Re: Charged of Credit Cards

Nope, charge off doesn't mean they have to report zero balance. Charge off is an accounting term that basically just means the lender doesn't expect to get paid back. In some cases they sell the debt to a collection agency (CA), in which case they DO have to update their TL to a zero balance, but then the CA in turn can report their own TL showing the full outstanding balance. However, if they don't sell it, they can keep reporting monthly until the 7 year reporting period is over. 


My advice is to pay those charge offs if you can afford it, because the utilization hit is hurting your scores and if they're being updated monthly, that also hurts. Finally, if they ever do get sold, then the CA will open up their own TL as I mentioned and then you'll get hit with a double-whammy for the same debt so you'd have two TLs showing (the CO AND the CA).

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