When you hear the term “Re-Aging” in the context of consumer credit two very different definitions exist. This may explain why the term can be a huge source of confusion.
One type of re-aging on delinquent credit accounts is a legal positive practice that will help restore delinquent credit accounts over a period of time.
The other type of re-aging is an illegal practice that will negatively impact credit reports and scores. Illegal re-aging of a debt essentially turns back the clock on when a debt is due to drop off your credit reports.
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. After a number of on-time payments a delinquent account is restored along with the account holder’s credit rating. Consumers who are granted re-aging may have suffered a temporary financial setback due to job loss or illness. It can be a positive experience to help consumers restore their credit.
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. Once a charge-off or collection account reaches seven years the credit bureaus must purge the account and it will no longer appear on future credit reports. This date from which the collection must be removed is informally referred to as the “purge from” date.
It is illegal for a creditor or collection agency to change the “purge from” date on a negative credit listing, causing it to remain on a consumer’s credit report longer than allowed by federal law.
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 illegal practice will hurt your credit score.
“Re-Aging” a delinquent account is a serious 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 time 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 to collection agency. Basically, the “purge from” date NEVER changes. 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
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.
On the Experian report it should be a section that says “Status Details: This account is scheduled to continue on record until (date).” On the Equifax report it should be a section that says “Date of 1st Delinquency” – add 7 years to that date. On the Transunion report it should be a section that says “Estimated month and year that this item will be removed. The ORIGINAL creditor and collection agency should have approximately the same dates under those sections (sometimes there is a month or two difference).
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. Sometimes they are a few months apart but they should be within the same year.
If the two entries show different dates, there may be a “re-aging” issue. Check your credit reports closely to ensure accuracy.
What to do about illegal re-aging
If you believe that an account on your credit reports is not reflecting the correct “purge from” date, then you should file a dispute with the credit reporting agencies and request an immediate deletion. If the original creditor or collection agency verifies that they believe the account is being reported accurately then take your complaint to the Consumer Financial Protection Bureau.
The complaint can be against the furnisher of information, the credit bureaus or both. Once contacted the furnisher of information or credit bureau will have to answer to the CFPB. As a last resort, you can take legal action. If you can prove it you have a substantial cause of action against the original creditor, collection agency or credit bureaus.