They are Not the Same Thing.
- A charge-off is when payments haven’t been made for a long time, and the lender simply considers your debt to be a loss for their business. They do not think that you will be making payments at all.
- The collection is a different matter. This is when debt is sold or transferred to third-party debt collectors. The debt is not in the hands of the creditor but the Collection agency.
Charge-off and Collection are usually reported to credit bureaus. Yes, they both negatively affect your credit rating. The presence of Charge-off and Collection in your report means a higher risk that you will not be able to pay off your debts again. Therefore Charge-off and Collection lower your credit score.
