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Reading Your Credit Report – What’s A Charge Off?

Reading your credit report – What’s a charge off?

Ready to make a big purchase and need to know your score? Or perhaps you’ve never actually pulled your own credit and you’re just curious. Don’t be caught off guard, knowing your credit score and what it means can be crucial. Here’s what you need to know.

A few years ago, my lender at my credit union told me about checking my credit by using a specific web site. Many people think they only have one score, but we actually have several. offers one free report every 12 months. This is a great way to verify that the information being listed is accurate. This is also a great way to catch identity theft.

Once you’ve pulled your report, it’s time to review it. Take a deep breath; at first all this information may seem overwhelming or difficult to understand. There are three major reporting agencies: Equifax, Experian and TransUnion. You may see a few differences but they generally have the same layout.

Credit reports are broken down into these parts:

  • Heading– The heading will be found at the top of your credit report. This area contains the credit reporting agency’s information and what date the report was pulled.
  • Your personal information -This section will have your information listed. It should include: Name, date of birth, and current and previous address.
  • Employment information and/or history – Here you will find your current and/or previous employers. It may include position held, dates of employment and possibly salary.
  • Credit accounts – This section lists a summary of your credit history. Here is where you may see variations from one report to another. All of your accounts will be listed here. Amounts owed, balances, loans that are paid off or past due or any account that may be in collection status.
  • Credit Score – Here’s where you will find the magic number. You may have heard it called several things, such as: Bureau score, Beacon score, or FICO. Your score is based on several factors such as: Amount owed, length of credit, your payment history and types of credit you have.
  • Collection accounts – Any accounts listed in this area are ones that have been sent to a collection agency, the creditor has given up and turned it over to a third party to attempt to collect the loss. If you see errors listed in this part, it’s very important to file a dispute as soon as possible. Visit the website of the reporting agency to get started. Remember that derogatory reporting’s can stay on your credit for many years. An automobile repossession can stay seven to ten years.
  • Trade lines – This is the breakdown of the creditors’ names, dates, the amounts owed and any history with that specific creditor.
  • Payment history and codes – You may see codes like these:

PAID – Inactive or paid off                                                            R – Revolving

CURR – Current or in good standing                                           0 – Current account

CHARGEOFF – Unpaid or charged off.                                        1 – Paid as agreed

DELINQ – 60 days past due                                                           2 – 30 days or more past due

What’s a charge-off, you ask? A charge off is the declaration of a creditor that lists a specific amount of debt that is owed and unlikely to be collected. This reporting usually occurs when the account has gone six months with NO payments by consumer.

  • Credit report inquiries – This is done to review your history for the decision-making process in your request for credit. This can include car dealerships, furniture stores, mortgage companies, insurance companies and many more.
  • Types of inquiries – There are two types of credit pulls. Soft inquiries are when you check your own credit or you receive a “pre approval” of some sort. Hard inquiries are when a lender runs a credit check for a loan. Having too many inquiries can be harmful to your credit score.
  • Fraud alert – This notifies lenders who are pulling your credit to be cautious and take extra steps to verify your identity before opening a new account. This will help reduce the opportunity for identity theft.

This is probably more information then you imagined possible. However, educating ourselves, monitoring and knowing your credit report is crucial. Your credit report can affect many aspects in life. Good credit will benefit you in any major purchase. So, it’s important to have information that is current and accurate.


Written by: Angela Rowe, FTWCCU Loan Processor