Time heals all wounds. At least that’s how the saying goes. Just as true as it is with losing a loved one or experiencing a bad breakup can be, it’s also pretty accurate with any negative or derogatory items on your credit report, too.
Yes, the older your bad debt and derogatory credit items get (as they age), the better it is for your credit report and your credit score. In even better news, there’s an end date (aka a purge date) for all of those bad credit items, such as bankruptcy, collection accounts, and more, to drop off your credit report altogether.
At least this is how it is supposed to work, in theory.
Keep in mind, though, that just because the time runs out on your debt, you pay off the debt, or you make payments on the debt, it does not mean that the bad debt that is negatively affecting your credit score is going to just go away—at least not before the purge from date allows the negative credit to drop off (after seven years for most debts, but can last longer in some situations and in some states).
What is Re-Aging Debt?
Re-aging debt is when the original delinquency date of a bad debt is changed. In reality, there are two types of re-aging. One is illegal and one is not.
On the illegal side of the equation, there are some companies that try to be slick. They change the original date of the delinquency so that it extends the purge date on your aging debt so that it stays on your credit report longer. And, oh by the way, this practice of re-aging debt is illegal.
But, just like anything in life, there are positives and negatives that come along with the re-aging of debt.
Pros
It may seem counterintuitive that a practice that is illegal can actually help you and your credit but it’s true.
Take a scenario where you have fallen behind on making payments on a particular account. You’re trying to play catchup so you are paying something towards your debt but you don’t have the cash it takes to pay off the debt completely or even to pay the past due amount.
This leads to the creditor reporting your payments late every single month. This, my friend, hurts your credit and your credit score.
In a situation like this, the creditor, bank, or credit card issuer can re-age the debt so that in fact it appears as if your payments are up-to-date, which helps to keep your credit score safe. The creditor does not change the original date of the delinquency, but it does report the payments as on-time and up-to-date (as long as you continue to make payments).
Another positive for re-aging debt accounts occurs when you work with a credit counseling agency as part of a Debt Management Plan (DMP). When you enroll in this type of program and make three payments on time, the creditors often re-age the debt. This, too, is a scenario that can help your credit score.
By the way, re-aging in these instances is not an illegal process. It’s only illegal when creditors try to fool the credit agencies and extend the time that delinquent accounts remain on your credit by changing the original delinquency of the date.
Cons
When a creditor changes the original delinquency date of your negative credit, it extends the amount of time the bad debt remains on your credit, which can also hurt your credit score.
Generally, a bad debt only remains on your credit for seven years from the original delinquency date and then falls off your credit.
Let’s say you didn’t pay your electric bill when you were a poor college student in 2012. You paid off the bad debt in 2014, but the mark on your credit remains. This is legal.
BUT, let’s say that your collection account was bought by a new collection agency in 2013 and they change the delinquency date to the date that they bought the account in 2013, extending the time the debt remains on your credit. The reason they do this is to give them more time to try to collect on the debt. This is illegal and also negatively affects your credit and can lower your credit score.
Fear it or Not?
So, should you fear the re-aging of debt? (Let’s be real—we’re not talking about Jaws here. That is scary!) I guess the long and the short of it is that it all depends on whether it is legal or illegal re-aging. The legal re-aging of debt can help your credit and your credit score, while the illegal type of re-aging debt can hurt and damage your credit and lower your credit score (Not to mention that it’s illegal).
What to Do
If you find yourself a victim of illegal debt re-aging, contact the Consumer Financial Protection Bureau. You may also want to contact a consumer law attorney to represent you and help you correct the situation.
The re-aging of debt has a good side and an evil side. Whether or not you should fear it or embrace the practice of re-aging debt all depends on the intent of the creditor and the results of the re-aging process.
In some instances, re-aging debt can help improve your credit. In other situations, the re-aging of debt can negatively affect your credit and lower your credit score. In the end, there’s no real reason to fear the re-aging of debt. You can fight those that are illegally re-aging debt to right a wrong. It just might take some work on your part to right that wrong.
Do these same concepts apply to student loan collections that have been reaged and reported incorectly leaving me with 13 negatives on my credit and is it worth paying a company to have them removed and can they be? They have been bounced around to so many companies i dont have all the paperwork to support all of inaccuracies.
Hi Abbey,
Re-aging has me confused and I am trying to get an answer that I understand. Here is the situation: My son’s girlfriend was I an auto accident in Florida in August 2009. She was the only one involved. She had limited car insurance. Her medical bills totaled over $9000 and her insurance covered up to $5000. She was unemployed at the time and had no other medical insurance. She was young and unaware of the consequences the unpaid medical bills would have on her credit score in later years. She did not pay the outstanding balance to the hospital. She also moved from Florida to Pennsylvania. The notices from the hospital stopped. In January 2014, she began receiving collection notices from a medical collection company. She was advised they were trying to collect the $2929 remaining balance from her 2009 accident. Since she is residing in Pennsylvania the SOL is 4 years which would have been August 2013. She is aware she still owes the debt, however, her credit report lists the “date opened” as 1/2014 with the last activity 6/2014 and a pat due balance of $2929. She does not have enough money to pay off the debt in full at this time but is willing to make payment arrangements however is concerned that the date opened lists the debt as recent and will remain on her record until December 2021 instead of falling off in July 2016. Also, it appears the past due balance will stay until the debt is paid in full instead of listing it under the current balance with a payment each month and only listing a past due if she fails to pay the agreed amount on time. She has not contacted the collection company yet as she is waiting to hear from you. I would like to help her as she and my son are planning a wedding and would like to purchase a home in the near future. Thank you.
Hi Diana,
Thanks to our author and personal credit expert John Ulzheimer, I have some insight to help you with your question.
First, the statute of limitations only pertains to the amount of time the debt collector is legally allowed to sue you over the debt. Even if the SOL is expired, you are still obligated to pay the debt (you just can’t be taken to court over it). Re-Aging refers to the reporting of the debt.
According to John, “the collection can only remain on her credit report 7 years from the date of the default of the original bill. The collection cannot remain until 2021 because that would suggest the doctor’s bill went into default in 2014, and clearly that’s incorrect. The “date opened” on a collection is a little confusing and doesn’t actually mean the account was opened on that date. Date opened on a collection is simply the date the account was purchased by the debt buyer OR assigned to the 3rd party collection agency. It is NOT the date used by the credit bureaus to purge the item. There’s a date
called the “FCRA Compliance/Date of First Delinquency” associated with collections. That’s the date of the first delinquency that lead to the default. That’s the date used as the “purge from” date. She may not be able to see it on her credit report but it’s there. You cannot report a collection to the credit bureaus without that date.”
Hope this helps clear things up!
Abbey
If a collection agency has had your acct for 8 yrs but just recently put it on your credit…does this classify as the 7 year rule? Or does that start from the date it shows on your credit? This is a hospital bill from 2008 but just now posted on my credit. Thanks
Hi Tracy,
The “7 year rule” applies to the date the account went into default, not the date it was opened. Unpaid accounts are usually turned over to collection agencies when they are unpaid for 180 days, after which they show up on your report as collection accounts. So, if you had an account that was opened in 2008 but only went into collections this year, you can plan on it remaining on your report as a collections account for another 7 years.
There are some tactics you can try to have the item removed before the 7 year mark–you can learn more about them here: https://thecreditsolutionprogram.com/staging/collection-accounts/
Abbey
If I have alot of debt w medical bills and I start paying them off, will it show that im paying it? Will it make my score higher if im making payments or that my balance is lower?
Hi Griselda,
If the organization you owe the debt to reports to the credit bureaus, then your credit report will show that you are making payments toward it. Medical debt almost never affects your credit score if you are making your payments on time–the real problems start if you leave the bills unpaid and they are sent to collections. Collection accounts show up as negative items on your credit report, and they will definitely hurt your score.
You can find out more details about how unpaid medical bills affect your credit here: https://thecreditsolutionprogram.com/staging/will-unpaid-medical-bills-hurt-my-credit
Abbey
In order to keep up to date with my credit score, I enrolled in two separate credit reporting companies. However, I am experiencing problems logging in to their websites and am paying a total of $50 a month for this service! Is there a free website that I can use that will allow me access to my credit score from all three credit reporting agencies?
Hi Gace,
If you are paying for a service, you should absolutely be able to take use it. If you can’t login, you should contact their Support team to fix the issues (they should have a contact phone number or email address listed on their site).
There are many credit monitoring services out there, so there is no reason to stick with one that you are unhappy with. You can check out http://www.gofreecredit.com and see if they offer what you are looking for.
Abbey
Would I just send the letter contesting the re-aged debt to Transunion? Or, do I have to send one to each of the three major reporting agencies? Also, is it best to go straight to the credit reporting agency(s) or the collector who has re-aged the debt. I really don’t trust the collector as they have already broken the law by re-aging the debt.
Thank you,
Bill
Hi Bill,
You should dispute this directly with the credit bureaus. If they need additional information from the collection agency, they will request that directly.
You can find the credit bureau addresses here: https://thecreditsolutionprogram.com/staging/credit-bureau-addresses/
Abbey
I had a settlement with a collection agency from $1400 to about $800 and we had the money taken directly out of my account evey month. There were a couple of times where I didn’t have any money so the transactions weren’t approved and other times they were approved and I got a couple of overdraft fees, and the date for the whole settlement came up and it turns that they went back from the settlement and it’s back to the original amount they just sent me a letter that I still owe the whole amount, but what happened with those $500-$600 I did pay since it got taken out of my bank account ? What do I do?
Hi Abram,
Hopefully you still have a copy of the settlement letter that the collection agency sent you when you made this agreement. Use that along with copies of your bank statement showing the payments that you made to them as proof that you do not owe the full amount.
You can send copies of these documents in writing to the collection agency along with a letter requesting that they update the balance that you owe to the correct amount. If you have paid what you agreed to, then they have no right to try to collect more than your settlement letter states you owe.
Abbey
I have a lien on my house and I was wondering how I can get it off? it has been there since 2008 and it is almost 7 yrs. it has been there…Thanks
Hi Gina,
Check out this article about removing tax liens, it should help you find out where to get started: https://thecreditsolutionprogram.com/staging/how-to-remove-tax-liens-from-credit-reports.
Abbey
Can the franchise tax board Calif. reage a tax debt from 2000,I last talked to them in 2005,so thats 8 1/2 yrs ago, thanks Mike
Hi Mike,
The “purge from” date should not be past 7 years from the first date of default (so roughly 7 1/2 years from the first missed payment).
Abbey
I have an account that should be purged but the collectors keep selling it off. Every new collector puts it back on my report. This account is now over 10 years old. Do I really have to keep disputing every time it is sold? It is such a hassle to keep cleaning this up between the three agencies, especially when it is sold at least twice a year.
Hi Erin,
Here is the response from the author and our personal credit expert, John Ulzheimer:
“If that’s actually happening then not only is it a violation of
the Fair Credit Reporting Act and the Fair Debt Collection Practices Act
but it also flies in the face of the credit reporting guidelines the
credit bureaus impose on the companies that send them information.
Collectors can sell their debts to other collectors but that cannot
cause ANY of the collections (past or present) to remain on the credit
file longer than 7 years from the date of default of the original
account. That’s re-aging.”
Hope that helps!
Abbey
What if a collection agency reported an account to Experian in 2009, but just in the last couple of months reported it to TransUnion?
Hi Sheila,
Did they change the “purge from” date? If so, then they have illegally re-aged the account. Otherwise, they have just started reporting to TansUnion, which is within their legal rights. Because different creditors sometimes report to different credit bureaus, this is why your score will vary between the three.
Abbey
What if a debt is no longer on your report cause of the statue of limitations has passed. My case it’s been 12 years. Can the collection agency still pursue you? I did pay on the debt 2 years ago but have stopped paying once I realized it was no longer on my credit. Now it has switched to several different agency’s in the last two years, so I am still being pursued. Please advise
Hi David,
The statute of limitations only applies to possible legal action. Once the statute of limitations expires, the lender can no longer take you to court, however you do still owe the debt and they still have a right to try to collect it.
Abbey
Earlier this year I got a notice that a collection agency “wrote off” a debt. One that was a HUGE amt, one I had no idea about. The institution that the debt originated from is one I have not dealth with in 14years. I wrote a letter, per instructions on back of notice, requesting information on what the debt was and when and since I was married, who. So far I have not heard back. What else can I do.
Hi Michelle,
The creditor is required to send the information you requested within 30 days or remove the item from your report entirely. If you have not reached the 30 day mark, be patient. If you have passed the 30 day mark and not heard anything and the item is still showing up on your credit report, you can send them a copy of the “Cass FTC Opinion Letter” along with a strongly-written letter reminding them they are legally required to send you proof of the legitimacy of this debt, and if they cannot provide it then they must remove it immediately.
You can find a sample letter and a video explaining this process in more detail here: https://thecreditsolutionprogram.com/staging/educational-videos/collection-accounts-2/
Abbey
Would this include school loans?
Hi Emma,
Our author and personal credit expert, John Ulzheimer, had to this to say:
“It depends on whether or not the student loan is government guaranteed.
Student loans that are not guaranteed by the government must be removed
after 7 years, just like any other consumer debt like a credit card.
Government guaranteed student loans don’t follow the same rules,
however. They can remain on your credit reports as long as they’re not
paid. So, the amount of time the can be reported by the credit bureaus
varies by loan type. Now, the credit bureaus may choose to remove them
all after 7 years, but that would be a choice and not a requirement for
government guaranteed loans that are not yet paid off. In either case,
however, the date from which the item must be removed (the so-called
“purge from” date) cannot be re-aged to make the item stay on a credit
file longer than allowed by Federal law.
In most cases re-aging isn’t a problem except for in the world of 3rd
party debt collectors. While re-aging is rare, it does happen. When it
does happen it’s almost always a collection agency that does it.”
Hope that helps!
Abbey
Just had a call from an obviously third party collection agent on a debt that was put in my name by my ex thirteen years ago. He immediately started conversation with”I have an affidavit in such & such county” I told him debt was uncollectable and not to call me again & I hung up.
Hi Stephanie,
Thanks for sharing. Have you heard back from the collection agency since?
Abbey
Does a collection agency have to tell you that a bad mark is going to be put on your credit file or can they just do it without informing you about anything, even that you have a dept?
The original medical biller didn’t even send me any bills?
And they are several years old according to the date of service.
Is it just bad billing practice, can they do that…
Unfortunately, bills can be sent to the wrong address or get mixed up and be reported under the wrong person’s account. The good news is that this situation is usually fixable if you do a little investigation. You can ask the debt collector to “validate the debt”–basically they need to prove to you that you owe this money and they have the right to collect it.
You can learn more about debt validation by watching these helpful videos from Mike here:
(1) https://thecreditsolutionprogram.com/staging/collection-accounts/
(2) https://thecreditsolutionprogram.com/staging/educational-videos/collection-accounts-2/
Abbey
Good information here…
Is it also illegal to transfer the same charge from collection agent to collection agent, causing that same charge to remain on your credit report for far longer?
Hi Monica,
It isn’t illegal for creditors to sell or outsource your account to different collection agencies–in fact, it’s a very common practice. Collection agencies are able to buy your debt for pennies on the dollar, so they can potentially make a large profit by collecting even part of your unpaid balance.
It is illegal for them to change the “purge from” date, or the date that the item MUST fall off your report. If you think that a collection agency has changed this date, you have the right to dispute this.
Abbey
How about some “nuts and bolts” info on how to challenge info on credit reports? I settled an account 18 years ago, and it not only shows as delinquent, but it should have fallen off.
Hi Patrick,
Here is a helpful video that explains the process of disputing errors on your credit report: https://thecreditsolutionprogram.com/staging/education/disputing-errors/.
You can also check out The Credit Solution Program, which details how to remove all kinds of errors and negative items from your credit report to help you raise your credit score and qualify for the best possible rates on loans: https://thecreditsolutionprogram.com/staging/
Abbey
A couple months ago I checked my Transunion report and saw something on there completely unfamiliar to me. I followed the directions on the website and filed a dispute. Within a week I had a reply by email from Transunion that it had been removed from my report. After reading this article I have decided to keep all my reports (I print them out so I can go over them slowly and completely). If something shows up re-aged this will help me contest it.
Hi Nora,
It’s great when the dispute process works so well like that — congrats on successfully cleaning up an item on your report. It just goes to show that it never hurts to regularly check your credit report for errors that may be hurting your score.
Abbey