Quick overview

  • Charged-off account: a creditor’s internal write-off after extended nonpayment (commonly after about 180 days for many consumer accounts). It’s a serious derogatory mark lenders review closely. (See CFPB guidance on negative reporting.)
  • Re-aging: when a creditor or servicer reports the account as current after a borrower makes a payment or enters a plan. Re-aging can improve reported status but does not automatically delete the original delinquency date.

How re-aging actually works

Re-aging is a reporting change: a lender may update the account’s status to current if you catch up under the lender’s terms. That can raise your score modestly because it reduces the account’s reported delinquency severity. However, the Fair Credit Reporting Act (FCRA) timeframe for negative items—usually seven years from the date of first delinquency—still applies. Re-aging should not reset that clock; the original delinquency date should remain the reference for the seven-year period.

How charged-offs affect underwriting and loan pricing

Lenders use a combination of credit score, recent payment history, debt-to-income ratio, and presence of derogatory marks when underwriting. A charged-off account signals higher credit risk and commonly results in:

  • Higher interest rates or fees
  • Denial for unsecured personal loans or prime mortgages
  • Requirements for collateral, co-signers, or shorter terms
  • Greater scrutiny of other accounts and employment/asset documentation

Even after re-aging or payment, a charged-off notation (or a separate collection entry) can push you into subprime pricing for several years.

Timing and the 7-year rule

Most negative consumer credit items, including charge-offs and collections, fall off credit reports seven years from the first missed payment that led to the delinquency. That timeline is set by the FCRA; see the CFPB for details. Re-aging should not change the first-delinquency date that determines when the item ages off the report.

Practical steps to protect loan access (what I recommend in practice)

  1. Review your credit reports from all three bureaus and document dates and status for any charged-offs. You can get free reports at AnnualCreditReport.com and through resources at the Consumer Financial Protection Bureau. (CFPB)
  2. Get written confirmation of any payment arrangement or re-aging agreement and confirm how the lender will report the account to credit bureaus.
  3. Avoid promises like “pay for delete” unless it’s documented and the creditor agrees in writing; many creditors won’t remove accurate negative information. If you negotiate a settlement, get the settlement terms and reporting language in writing.
  4. Consider rebuilding with secured credit cards or credit-builder loans after addressing current accounts—these demonstrate on-time payment history.
  5. If a charged-off balance is inaccurate, dispute it with the credit bureau and the creditor immediately; keep records of correspondence.
  6. Work with a certified credit counselor or a reputable financial advisor if multiple derogatory marks or ongoing collection calls exist.

Real-world outcome (illustrative)

In my practice I’ve seen clients re-age an account after a small payment and gain enough score improvement to qualify for a secured card or a small installment product. That helped rebuild payment history, but previously charged-off accounts still limited access to larger unsecured loans or favorable mortgage pricing for several years.

Common mistakes and misconceptions

  • Thinking re-aging erases the original delinquency date. It usually doesn’t. The seven-year clock typically runs from the first missed payment.
  • Assuming a paid charge-off equals a clean credit report. A paid or settled charge-off still shows as derogatory and will influence lender decisions.
  • Relying on verbal promises about reporting—always get terms in writing.

What lenders may ask after a charge-off

  • Explanation letter for the derogatory account
  • Evidence of steady income and lower debt-to-income ratio
  • Collateral or co-signer for unsecured loans
  • Higher down payment or higher interest rates on mortgages or auto loans

Action checklist (next steps)

  • Pull your credit reports and identify charge-off dates. (AnnualCreditReport.com / CFPB)
  • Request written confirmation for any re-aging or settlement.
  • Pay or settle only after getting clear reporting terms.
  • Rebuild with secured products and small installment loans to show consistent payments.
  • Consider prequalification tools to measure likely rates without hard inquiries.

Internal resources

Authoritative sources

Professional disclaimer

This content is educational and based on professional experience; it is not individualized legal, tax, or financial advice. For decisions that affect your credit or loan applications, consult a licensed financial professional or certified credit counselor.