What is Re-Aging?
Re-aging, also known as “curing” or “rollback,” involves changing the delinquency status of an account. Payment history is one of the most important factors in calculating your credit scores, and within that factor most scoring models will look at:
- The number of late payments listed on the credit report
- How recent those late payments were
That’s where re-aging can come in. It can affect both of those factors in either a positive or negative way. Of course, the best way to find out how this might help (or hurt) your credit is to check your credit scores which you can do for free. Then you can can create an action plan that may include asking creditors to re-age accounts, or disputing those that have been improperly re-aged.
Positive re-aging is designed to help customers who are making an effort to get back on their feet after financial problems. Once you fall behind on a bill, it can be difficult to catch up. Unless you can come up with a large lump sum to pay off your debt, your account may be reported as late every month, even though you are making payments. (These are called “rolling lates.”) To prevent these types of accounts from being listed as delinquent every month, the bank or card issuer can re-age them so they are reported as current.
In this type of re-aging, an account that was reported as late each month to the credit reporting agencies will now be reported as “Paid on time.” Sometimes the financial institution will go back into the past payment history and bring all of the delinquent payments current. In other cases, the account will simply be listed as “Paid on time” for the current month and going forward.
Tip: If you enroll in a Debt Management Plan (DMP) with a credit counseling agency, many creditors will re-age your accounts after you make three monthly on-time payments. This can be helpful for your credit scores. Ask your counselor whether your creditors re-age accounts.
Negative re-aging is changing the delinquency status of an account to fool the credit bureaus into thinking it’s more recent than it really is. Negative re-aging is illegal and if it occurs, the collection would remain on your credit reports longer than the seven years currently allowed by the Fair Credit Reporting Act. Some collectors do this intentionally and some do it accidentally. Regardless, you need to make sure that the collection doesn’t stay on your credit files any longer than allowed by law.
How long is that? Collection accounts may be reported for seven and half years from the date you first fell behind with the original creditor. That’s true regardless of whether the account is paid, unpaid or settled in the meantime. If a collection agency re-ages the original date of delinquency it is likely breaking the law, and the consumer should contact the Consumer Financial Protection Bureau and/or a consumer law attorney.