One type of re-aging on delinquent credit accounts is a legal positive practice that will help restore credit accounts and your credit scores over a period of time.
The other type of re-aging is an illegal negative practice that will decrease your credit scores immediately and may even negatively effect your ability to get new credit.
Legal Re-Aging (Positive)
A creditor may have a process of re-aging a negative account, before it reaches the charge-off level through a mutual agreement between the creditor and account holder. Creditors may legally re-age a past due account and after a number of on-time payments, restore the account holder’s credit rating.
Consumers who are granted re-aging have usually suffered a temporary financial setback and are now recovering. It can be a positive experience and help a consumer restore their credit. Late payments are “cured” and reported as current by the creditor.
Illegal Re-Aging (Negative)
According to the Fair Credit Reporting Act (FCRA), most negative credit information can remain on your credit report for 7.5 years (7 years + 180 days) from the date of the first delinquency (DOFD).
The date of the first delinquency (DOFD) is the date a consumer first became 30 days late and no further payments were made on the account from that date forward. At this stage the DOFD usually leads to a creditor charging-off the delinquent account.
The FCRA Compliance Date is the official beginning of first date of delinquency (DOFD) which cannot be changed once an account is charged-off. The 7-year clock begins 180 days from the time you FIRST missed a payment.
The Fair Credit Reporting Act states:
“The 7-year period shall begin, with respect to any delinquent account that is placed for collection (internally or by referral to a third party, whichever is earlier), charged to profit and loss, or subjected to any similar action, upon the expiration of the 180-day period beginning on the date of the commencement of the delinquency which immediately preceded the collection activity; charge to profit and loss, or similar action.”
Creditors can charge-off an account 180 days after the first date you missed a payment. The date you became delinquent begins the “Aging” process and once the debt has matured 7.5 years, it must be deleted from your credit report.
Some creditors and debt collectors will report to the credit reporting agencies a more recent status date, thereby extending the negative reporting of the charged-off account. This is illegal and will hurt your credit score even more as recent negative information is more detrimental than older negative information.
“Re-Aging” a delinquent account is a serious violation of the FCRA. An original creditor or a debt collector may engage in illegal re-aging on the same charged-off account. Within 90 days of a charged-off debt being placed on your credit reports, the creditor must report the FCRA Compliance Date and failure to do so within that time period is also a violation of the FCRA.
Once the original creditor reports the FCRA Compliance Date to the credit reporting agencies, it is set in stone. This date cannot be changed or updated under any circumstance. The clock on the date the account FIRST went delinquent cannot change no matter how many times a charged-off debt is purchased, transferred or sold.
The charged-off account can bounce from collection agency to collection agency but according to the FCRA, the debt can only be reported for 7.5 years from the date of first delinquency (DOFD).
How to Determine Illegal Re-Aging has been Committed
Get copies of your from the major three credit reporting agencies. Do not use a tri-merged credit. The actual hard copy of your credit report from the three major credit reporting agencies is necessary. Check each credit report for the date scheduled for removal of a negative listed item.
Experian and Transunion display a “Status Date” showing the removal date of a negative item (subtract 180 days and that should be the DOFD). Equifax displays a “Date of Last Activity (DOLA). They seem to use the DOLA as the date of first delinquency (DOFD) so you need to add 7 years to that date in order to determine the removal date.
Look at the dates reported by the original creditor and the debt collector. Are the dates in sync with the FCRA Compliance date? The removal dates of the original account and the subsequent collection account, if any, should be the same.
Illegal Re-aging occurs when a creditor or collection agency updates the Fair Credit Reporting Act Compliance Date and extends the 7.5 year statute of limitations on reporting a delinquent account. Check your credit reports closely to ensure accuracy.