How a Write Off Affects Your Credit

A credit write off is not something that reflects positively on your credit report. You receive a credit write off on your credit report when you have defaulted on a secured or unsecured debt. This can be anything from a credit card defaulting or a foreclosure on your home. Unfortunately for you, this is one of the worst things to have representing you and it is very hard to get past. Below is a little insight on what exactly a credit write off means on your report.

How Credit Write Off Affects You Financially

A credit write off reflects very poorly on your financial past. It is important to have a good credit history to obtain loans for a home, car or personal use. With just one write off on your credit score, the interest rate will raise tremendously. A write off tells potential lenders that you were either unable to pay back a previous loan or that you were unwilling. Neither of these things are qualities lenders look for and you will most likely be turned down. If you are able to obtain a loan after a write off, the interest rate will be extremely high, which often leads you to have problems in the future with repayment. As far as your credit score is concerned, a write off is a terrible thing to have. You can redeem yourself, but it takes several years to overcome. The newest events on a person's report are taken into a higher account, so you do not want a write off to be most recent. While it does take years, you can overcome a write off over time.

Reason for Credit Write Offs

The reason why a credit write off shows up on your score is because the lender needs to be able to claim this loss. In order for the lender to deduct it from their taxes, they have to prove that the loan they provided you was uncollectable. This also is a way to show future lenders your history as well as those that you may be renting from or working for. Unfortunately for the borrower, write offs can happen more quickly now. It only takes 6 months from the last payment and 60 days for you to be deemed uncollectable and marked on your report.

What to Do if You Have a Write Off

While it may seem wrong, it can actually hurt you to pay off an old write off that you have. It doesn’t seem to make sense, but an older write off being reactivated through a payment process will just bring it more current. This weighs heavier on your report than just leaving it in the past and making smarter financial decisions in the future. It takes seven years to improve your credit report when you have a bad write off. The best thing to do is to keep paying your current bills and avoid this issue in the future.

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