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
- Credit limit The maximum you can borrow on a revolving account like a credit card — a key input to your credit utilization ratio.
- 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.
- Subprime loan A loan made to a borrower with a low credit score, priced with a higher rate to offset the added default risk.
- Unsecured A loan that requires no collateral — approval rests on your credit profile and income.
- Jumbo loan A mortgage larger than the conforming loan limit, which cannot be bought by Fannie Mae or Freddie Mac — so it carries stricter terms.