Charge Off Rates

RELATED WIKI ARTICLES

Related Articles

 
TOP CONTRIBUTORS

This is the percentage of accounts open during a given period that are written-off as uncollectible debt because of delinquency (usually 180 days after the due date).

The credit issuer writes off the loan or account because it deems repayment as highly unlikely. The creditor suffers because it loses the money from the loan, but benefits because it receives a tax benefit associated with the write-off. When the credit issuer charges off a loan, it generally sells the debt to another agency (usually a collection agency) for a reduced price. The collection agency then attempts to receive repayment in full from the original borrower. For example, a credit issuer with a delinquent account of $1,000 will sell the account to a collection agency for 40 cents on the dollar, or $400 in hopes to recover at least part of the loan. Then, the collection agency attempts to recover the full $1,000 from the borrower to make a profit.

A charge off has drastic ramifications for the borrowers credit score and may prevent the borrower from such things as getting approved for a Mortgage or car loan.

Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki