Depending on your situation, debt re-aging can help or hinder your credit scores. While one represents an act of fair business practices, the other represents business at its worse. Read on to discover the particulars about debt re-aging and how it could affect you.
Consumer Request Re-aging
The first type of debt re-aging is a welcome relief for struggling consumers. Some lenders are willing to re-age debt as an act of goodwill for loyal customers. In the wake of an economic depression, many people have become first-time members of the late payment club. If you are among this group, you may be able to fix your credit via re-aging. After finding your financial stability, ask your lender to reset your account to “current,” thereby deleting any past transgressions. Many lenders are willing to help customers who:
- Have a long-standing record of payment
- Are able to repay past due balances
- Have made at least three consecutive payments on time since the discrepancy
Use this option sparingly since “frequent flyers” won’t be taken seriously, and be sure to show your appreciation by maintaining your record of prompt repayment in the future. Such examples of derogatory forgiveness are not guaranteed, but they are a welcome credit repair solution if your creditors will play ball.
The other side of debt re-aging is dark one. The tool used to repair credit can also be used to hurt consumers when they least expect it. This type of abuse is perpetrated at the hands of collection agencies. When a bill falls into long-term delinquency, it is “charged off” by your creditor and sold to a collection agency. The collection agency then attempts to recoup the overdue amount, sometimes using less-than-ethical tactics along the way. They may call you at work, contact your family and friends, and even harass you to incite payment. One such unfair method is debt re-aging. To damage your credit score, the collection agency will report your account to the credit bureaus as a recent delinquency, essentially “re-aging” the date of the last derogatory notation, an action that can practically cripple your credit score, especially in the short term. Not only is this act illegal, it is considered false credit reporting. So, what should you do?
If you have fallen victim to such collection agency tactics, there are ways to counteract the negative effects:
- Obtain a copy of your credit reports and highlight any unfairly re-aged accounts.
- Find out when the Statute of Limitation (SOL) for credit reporting began on the debt; in other words, the date of the last recorded activity on your account. Chronically delinquent accounts usually remain on your credit report for up to seven years, regardless of your efforts of repayment. Note: if you are unsure of the Date of Last Activity (DOLA), contact one of the credit bureaus and ask for it. Be sure to state that you are simply calling to clarify your credit information and are not filing a dispute.
- Draft a validation letter to the collection agency. Ask for the following:
- Written proof that the collection agency owns the debt or has been assigned to the debt by your original creditor. Note: buying your debt does not free the agency of FDCPA guidelines.
- Written account statements from your original creditor, outlining:
- The amount you currently owe
- A complete payment history
- Additional calculations such as fees, interest, and penalties
- A copy of the original agreement or application between yourself and your creditor
- Documentation that the third-party collector is licensed and bonded to collect debts in your state
If the collection agency cannot or will not provide the requested information, they must ask the credit bureaus to remove the negative citation on your credit report, and they may even be required to forgive the debt itself.
- Ask for help. Lexington Law works with re-aged accounts every day, and our staff is equipped to represent you accurately. If you are feeling overwhelmed by the prospect of a falling credit score, you don’t have to face the consequences alone. Avoid giving in to unscrupulous collection agencies, and fight back against unfair practices. Your credit score could depend on it.