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Re-aging, also known as “curing” or “rollbacking,” an account involves changing its delinquency status. Re-aging delinquent accounts can be a good thing or it can be an illegal practice. Here we’ll explain re-aging debt and what affect it can have on your credit.
For starters, let’s explain what we mean by delinquency status. An account is generally considered delinquent if it is has gone unpaid or it is not being paid as agreed. Accounts in good standing, conversely, are those that have either been paid off or are currently being paid as specified in the original loan contract. Delinquent accounts are generally reported to the major credit bureaus and a creditor can also sue to recoup what is owed. However, the time frame in which both of these actions might happen varies for lender to lender — and can be affected by state laws. There are statute of limitations in each state, for instance, regarding debt collection time limits.
Payment history is one of the most important factors in calculating your credit scores, and within that factor most scoring models will look at:
That’s where re-aging of old debts can come in. Changing an account’s delinquency status can affect both of those factors in either a positive or negative way. Of course, the best way to find out how re-aging might help (or hurt) your credit is to check your credit scores — you can see two of your credit scores for free on Credit.com. Then you 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 some payments. When this happens, it’s 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 the delinquent payments current. In other cases, the account will simply be listed as “paid on time” for the current month and going forward, as long as payments continue to be made on time.
Tip: If you enroll in a Debt Management Plan (DMP) with a credit counseling agency, many creditors will re-age your delinquent accounts after you make three monthly on-time payments. This is a time when re-aging delinquent accounts can be helpful for your credit scores. If you go this route, it’s a good idea to ask your counselor whether your creditors re-age accounts.
Negative re-aging debt on a credit report 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, you are in violation of 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.
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