Definition
A lender declaring a debt unlikely to be collected, typically after about 180 days of missed credit card payments, and writing it off its books. The debt does not disappear: you still owe it, and it is often sold to a collection agency.
Why it matters
A charge-off is among the heaviest single marks on a credit report and lingers up to seven years from the first missed payment. Catching a spiraling account before charge-off preserves far more options.
Example
A $2,000 card balance goes unpaid for six months and is charged off, then sold to a collector. The borrower still owes the money, now to a collection agency, and the report shows both the charge-off and the new collections account.
Related terms
This definition is educational, not financial, legal, or tax advice. U.S. rules and limits change; verify time-sensitive details with official sources. See our disclaimer.