QUESTION: I recently had an old charge off debt change its last reported to a more accurate date and change from closed to open debt and I haven’t used the card in 4 years or dispute the debt even. My score dropped a 135 points. Is this considered re-aging or is it allowed? Is there any way to dispute this off?
ANSWER: Unless the date the account is due to be purged from your credit reports has been changed, re-aging has not occurred. Re-aging has to do with how long a negative account can remain on your credit reports. As long as they have not changed that date, the account has not been re-aged.
What I suspect has caused such a tremendous drop in scores, given that nothing else has changed, is the updated last reported date along with the open status. With an open status, the delinquent amount may be negatively affecting your credit utilization (total amount owed on revolving credit accounts). Higher utilization means lower credit scores because the charge-off is negatively impacting your overall utilization.
Once an account is charged-off it should never appear as “open.” With a charge-off the original creditor is declaring the debt to be uncollectible. It could be that the debt has gone to a collection agency and what you may be seeing is an “open” account in collection. Collection accounts are reported with an “open” status, until the debt is paid or the collection agency’s authority to seek payment is terminated.
While the Fair Credit Reporting Act gives you the right to dispute inaccurate information, it might be somewhat difficult to dispute the current reporting because it may be accurate.
One option would be to request the creditor to substantiate each and every fact they are reporting about the account. In other words, you would ask them to “Prove it or Delete it.” With this tactic you must be cognizant that if the debt is still within the statute of limitations, you can be sued for the unpaid amount. Plus, the account could be updated even more once you initiate a dispute, with a higher amount owed if additional fees or interests is added.
Another option would be to settle the debt to stop the hemorrhaging to your credit score. Negotiating a pay for deletion would be the optimal solution. Unfortunately, some creditors report monthly to keep you FICO score low. The only way to stop it now, unless you are successful in a dispute, is to negotiate payment.