Paying off a charged-off debt can help you look better in the eyes of future lenders. But in most cases, it will not improve your credit score or have the charge-off removed from your credit profile. A lender charges off your debt once you stop making payments on your account for several months. Initially, listing a debt as charged-off is a clerical act that moves your debt from an active account to an inactive account and allows the lender to write the debt off as a business loss. Soon after, the lender will either sell or transfer the debt to a collection agency. That’s when you often start receiving harassing phone calls. And the account will be reported to the credit bureaus as a charged-off debt, which can easily shave 100 or more points off your credit score. A charge-off can shave 100 or more points from your credit score and put you in a lower credit tier. You can have a collection account for any type of unsecured debt, including a personal loan, a student loan, or credit card debt. Secured loans, such as a mortgage loan or an auto loan, result in foreclosure and repossession.