Glossary
Charge-off
When a creditor gives up trying to collect a debt through normal billing and writes it off as a loss — typically after 180 days of non-payment.
A charge-off means the original creditor has stopped expecting normal repayment and recorded the debt as a loss for accounting purposes — but it does not mean the debt disappears or that you stop owing it. The account is usually sold to a collections agency, which can continue pursuing payment, and the charge-off itself sits on your credit report for up to seven years, doing significant ongoing damage to your score. Paying or settling a charge-off does not remove it from your report, though it does update the status.
Related terms
- PMI Private mortgage insurance — a monthly premium that protects the lender, not you, when your down payment is under 20%.
- Deed of trust A three-party document (borrower, lender, trustee) some states use instead of a mortgage to secure a home loan against the property.
- Unsecured A loan that requires no collateral — approval rests on your credit profile and income.
- Short sale Selling a home for less than what is owed on the mortgage, with the lender's approval — an alternative to foreclosure.
- Fixed rate An interest rate that never changes for the life of the loan — your payment is the same every month.
- Origination fee An upfront charge (0–8% of the loan) deducted before funds reach you. A $10,000 loan with a 5% fee delivers $9,500 — but you repay all $10,000.