Can old collection accounts be re-aged and lower my credit score?
I had spoken to you on the phone a few weeks back and you suggested I order that book about surviving debt, I did, thank you! Lots of great info in there I will be using as I work on cleaning up my credit report/score. I do have one question for you though, and I only ask because I am not sure if this is what is called "re-aging" on an account.
This past week I received a note from a collection bureau for an account that had dropped off my credit report eons ago. It does not appear on my report, any of the three reports actually, so, can they do that... REACTIVATE something that has already dropped off? I thought that was a No-No.
Can old collection accounts come back to haunt me on my credit report and lower my credit score?
—LE
I always like hearing back from people about their progress with debt collection and credit reporting concerns that remain after having consulted with is. I am happy to hear you were able to consult with a CRN professional and that you found value in following the advice to purchase the “Guide to Surviving Debt” which is published by the National Consumer Law Center.
Reaging can have several meanings when applied to credit card debt.
The two ways the term is generally applied are:
1. Payment on an account with your original creditor is late by 30-60-90 days and you are given the opportunity to bring the account current either immediately or over a brief period of time, and the creditor, as a courtesy, updates your credit report to remove the late pay history thereby “re-aging” the account.
This type of reaging is only available on accounts that are not charged off and typically only if the account is less than 90 days past due and/or prior to the credit grantor closing the account. Not all creditors will offer this courtesy and those that do only offer this once during the life of the account.
2. When payments on accounts are in advanced stages of delinquency (many months or years of consecutive nonpayment), “re-aging” can occur if you make a partial payment, full payment, admit to the debt etc… You may be resetting the statute of limitations (SOL) that has tolled for being legitimately sued in court as part of any collection effort, or you may find your credit report will reflect recent payment activity affecting your credit score negatively due to an old trade line previously considered “stale”, is now “fresh” with recent activity.
Given your comment that the account in question has long fallen off of your credit report tends to suggest the account has remained unpaid for more than 7.5 years. This would also suggest that the SOL in order to legitimately sue you in an effort to collect has passed as well (depends on your state of residency, whether you have moved etc…).
The debt does not go away after the SOL expires, or after the legal reporting period for the trade line to stay on your credit report expires. Receiving a collection letter after this long is not unheard of.
Collection efforts can and do continue after bad accounts fall off your credit report.
You are being contacted in an attempt to collect “zombie debt”; debt that is for all intents and purposes – Dead. It has fake life being breathed into it by a debt buyer who hopes to get you to pay. If you do pay, there is a chance that you re-age the account and potentially defeat your efforts to restore your credit to a small degree. I think that unlikely at this point though.
You may want to consider sending the collection company a cease communication letter at this point. Be sure to send certified mail return receipt and keep a copy of all communications and return receipts for your own records in case there is a need for them in the future.
If the negative trade line is indeed past the reporting period allowing it to stay on your credit report then “reactivating” in the way you described is indeed a no-no. That does not mean it could not happen though. If it does, you have the ability to dispute that entry with the credit reporting agencies and with the furnisher of the bad information. Here again, you would send any dispute using certified mail return receipt. If the no-no behavior were to persist after that, I would encourage you to let us know so that we could then connect you with a consumer law attorney who has experience sending debt collectors and bad credit information providers to the corner on a time out (the no-no theme continuation where a federal court judge will do the scolding).
I hope this answered your question. You are welcome to post in the comments below to ask additional questions and certainly to provide updates about your progress in reaching your credit goals.
Anyone worried about a debt collector re-aging derogatory credit reporting can post in the comments below for feedback.
About Michael BoveeMichael started CRN in 2004 with a mission to provide people in need with detailed debt and credit help and education. Michael has participated as an expert panelist in federal consumer protection rule making, collaborated on state law changes governing debt consolidation, has worked as an expert witness in court matters related to the debt relief industry. He is available to speak with you about your financial struggle and helps people resolve their debt problems daily.
Thanks for your article. I was researching for someone that has a 35,ooo dollar debt that’s 3 years old as of Dec. 2012 on a RV that was sold at auction through voluntary repossession. Now they’re wanting to buy a house and this debt is showing up as quote;
Simply said, the repo was in July 2009 and my credit report(s) reflect a repo occurred in Oct 2012.
End quote. If they dispute the reports will there be an adverse reaction? Thanks.
Robert – If the repo occurred in 2009, but is showing as if it occurred in 10/2012, this would be inaccurate reporting. There has long been a practice used by information furnishes and credit reporting agencies to use automated systems that are terribly rife with inadequacies, or even outright purposeful “re-aging” of negative collection credit entries in order to make the debts appear more recent.
Disputing the information as incorrect would not lead to an adverse reaction per say. It may prompt renewed collection activity though.
If sending a proper dispute to the credit reporting agency, and the furnisher of of the information does not yield a corrected report, or the dispute goes unanswered, filing a complaint with the CFPB would be the next step I would suggest. Complaints about credit reporting can be filed on the CFPB website: https://www.consumerfinance.gov/complaint/ On that page you will see the credit report icon. Start there. But I would see what the result of the dispute is first. Send all disputes certified mail return receipt.
LE,
Be sure to focus your effort in rebuilding your score by adding positive items too.
Do you have revolving credit card accounts open right now? If so, how many? Two or more unsecured revolving accounts is sufficient. If none, consider opening a secured card that can later be converted to an unsecured card as a credit building tool.
Many banks offer a secured card program that can later be converted to unsecured. They will vary with the amount of money needed to establish the account and set in savings, and vary in the amount of time it will take to convert the account to unsecured.
Bank of America offers one of the better secured card program where you deposit as little as $500 into savings (securing future payments) for as little as 6 months where you can then pull the $500 and have an unsecured account.
Thanks so much for the info. You guys/gals ROCK! This is good brain “ammo” I can use for this situation and I appreciate it. You know, it really sux to have had perfect credit for a while, then hit a bad spell, make bad choices, etc. that totally screws your credit up til it is nearly unrecoverable. Now, I can take care of my debts, and I want to get my credit back to a pristine (if possible) level, but I worry about old stuff getting dredged back up out of the depths.
You mentioned statue of limitations and activity on an account…well, I can assure you I have not had any contact with anyone at the company that sent me the letter and “six coupons for the payment plan”. I will keep a copy of this info handy. Knowledge, it’s a beautiful thing!