How To Protect Your Credit Before A Charge Off

image- Feb 4, 2019credit, Credit Maintenance0 comments

Things in life, unfortunately, do not always go as planned. Sometimes due to certain circumstances (medical emergency, unemployment, financial disaster, etc.), you may find yourself with very high credit card bills. You know that there is no way you can afford the minimum payments. Unfortunately, you know that your only option is to stop making payments resulting in your accounts to be charged off! I know this is a very tough situation! The idea of this post is to give you some tips for some smart ways to handle a charge off situation which would be the least damaging to your credit.

PLEASE NOTE: I am not an attorney or a debt adviser, so none of the tips given in this post should be taken as legal advice. Please consult an attorney to discuss your situation.

 

 

 

The Least The Better

 

 

When it comes to credit, the question would be: How many accounts are in charge off status, rather then what the total amount owed is. Therefore, try to pay the smaller balances in full. That would be a better option than knocking a little bit off a large balance while still leaving a balance that will charge off.

For example:

You have 5 credit card accounts totaling $10,000 in balances:

Card A- $5,000 balance

Card B- $2,500 balance.

Card C- $1,500.

Card D- $500.

Card E- $500.

You have only $1,000 available in your bank account to make payments.

Paying the $1,000 for card A ($5,000 balance) and bringing down the balance to $4,000, would still leave the card to charge off at the end. And the total number of accounts which will be charged off would still be five!

But if you pay up card D in full ($500) and card E in full ($500), then these accounts will be marked paid as agreed. This would leave you only with cards A, B, C, to charge off. So the total accounts that will charge off would only be three.

Please keep in mind that this idea is only an overall idea regarding protecting your credit. Please consult with a debt attorney about your situation.

 

 

Make Sure To Stay With Open Credit Cards

 

 

In a case of a charge off, the credit card issuer might close down all your credit card accounts. They will even do it to the accounts that are in good standing. For example, if you have three American Express cards and you end up charging off one of them, then American Express might close down all of your accounts.

The problem is that once you charge off, then your credit will be shot and no new banks will want to approve you. So, therefore, before you charge off make sure to get approved for at least three credit cards that are NOT from the same credit card issuer that you will end up charging off. This will help you build your positive (with the open accounts) and help you slowly age the negative items. By doing this you would ultimately get your credit score fixed faster!

 

 

End Note

 

 

We all hope never to be in such a situation, but if unfortunately, you are in a situation where you need to have your credit card accounts charge off, at least play smart. This will help you with some damage control for your credit.

 

 


 

 

Rather watch a video?

 

 

https://m.youtube.com/watch?v=5NmaGo1LAek&t=10s

Hope this helps!

Was this article helpful?

image
Sam Sam has nearly a decade's worth of experience educating his many readers on everything credit. Sam spends his days checking out credit cards for a full report, from the minute benefit details to the shebang of welcome bonuses. Plus studying the ins and outs of building proper credit. It’s his favorite pastime and he loves sharing it with others.

Leave A Comments

This site uses Akismet to reduce spam. Learn how your comment data is processed.

0 Comments

Recent Posts

Follow us

image

Click here to subscribe to
our WhatsApp channel

Todays
best offers

image

Chase Ink Business Preferred

Earn 100,000 points after $15,000 spent within the first 3 months.

more info
image

Chase Ink Business Unlimited

Earn $750 (75,000 points) after $7,500 spent within the first 3 months. Intro 0% APR for 12 months on purchases.

more info
image

JetBlue Card

Earn a total of 100,000 points after a total of $6,000 spent within the first 12 months. See offer details for full offer. Intro 0% APR for 12 months on balance transfers.

more info
image

Chase Sapphire Preferred

Earn 60,000 points after $4,000 spent within the first 3 months.

more info

You May Also Like

8 Actionable Tricks for Quick Credit Score Improvement

8 Actionable Tricks for Quick Credit Score Improvement

Ever seen a 4 year old do one of those “it’s not fair” tantrums? (No? Good for you…) What I’m gonna say may (or may not!) lead to a similar reaction, but don’t fret- it can be worked out! So, here it goes… Did you know that even if you never missed a payment your...

read more
Where Can I Find The Most Accurate Credit Scores?

Where Can I Find The Most Accurate Credit Scores?

What’s sweat-inducing, hair-raising and spine-chilling for men and women alike? Credit scores. Yep, those intangible & non-physical numbers that determine our lending options, insurance quotes, job opportunities and even the fact of having a roof over our head....

read more
Average Age of Credit History -True or False

Average Age of Credit History -True or False

If you ever reviewed your credit report using Credit Karma, Wallet Hub, Nerd Wallet, etc., you may have noticed that they all break down your credit history based on the average age of credit history taken from all your trade lines combined. For example, if you have a...

read more
The 5 Most Important Factors In A FICO Score

The 5 Most Important Factors In A FICO Score

The FICO score model is the mostly widely used scoring model. As per Fico, as much as 90% of lending decisions that are done using a scoring model, use the Fico scoring model. In this post we will discuss the 5 most important factors that Fico would look at in order...

read more
Why Are My Credit Scores Different?

Why Are My Credit Scores Different?

When people check their credit score, should it be by Credit Karma or on their Discover statement, etc., they look at the three-digit number. They take it as a fact that this is their credit score. Period. The same way they know their age and weight, they feel that...

read more
Credit Scores And Mortgages: Here Is What You Need To Know

Credit Scores And Mortgages: Here Is What You Need To Know

Shopping for a mortgage but got bad credit? You are not alone! I invited a great mortgage expert Chaim Tarkieltaub from Mint Capital to explain the differences between the different mortgage products available for consumers at all stages of credit. Let’s explore the...

read more
image

Download link sent
succesfully

Got it*please check your promotional inbox
image

Error sending download link

Try Again