Re-aging debt refers to the changing of a delinquency status on accounts with late payments, or overdue debt.
A delinquent account is an account which is not paid off, and has many late payments. An account in good standing is paid off as per agreement, and is paid on time.
When it comes to re-aging an account, the process involves making an account appear in good standing, rather than delinquent.
Re-aging debt can have both positive, and negative effects, on your overall credit profile (and score).
Similarly, the method by which an account is re-aged can be done either legally, or illegally – especially when it comes to the type of account, the creditor you’re working with, and your state’s own laws.
The Pros of Re-Aging DebtDebt obviously has a negative effect on your credit score.
Late payments, and how recent those late payments were reported, contribute to the decrease of your FICO score.
Re-aging old debt can possibly help alleviate the negative effects of these recorded lates.
The hard, cold truth about debt is that if you’re behind on payments – especially if you’re struggling financially – it can be near impossible to catch up on lates in a way that improves your score.
Even if you start making payments on an overdue account, unless you settle your debt all at once, that account will continue to be reported as delinquent, and late (this is called ‘rolling lates’) – which brings your score right down.
That’s where positively re-aging accounts come in.You can ask the bank, or credit card issuer of the account to re-age it.
This means that instead of reporting the account to credit reporting agencies each month as ‘late’, they will instead report as ‘paid on time’.
Depending on how the account issuer re-ages your account, they may change past collections to ‘paid on time’, or they may just report the current month as ‘paid on time’, and continue into future months – as long as you continue to make timely payments.
To make use of positive re-aging, talk to your financial institutions, or creditors, to see if you can’t be put on a Debt Management Plan and/or have your old debt re-aged.
The Cons of Re-Aging DebtThere is a process of re-aging accounts which is illegal. This obviously will have a major negative effect on your credit profile over time.
Illegal re-aging involves changing the delinquency status of an account on your credit report, with the intent to trick Credit Bureaus into thinking it’s more recent than it is.
This can be done intentionally, or accidentally by collectors.
Regardless, if you don’t want to get into some major trouble – you’ll want the re-aged collection removed from your report as soon as possible.
Collection agencies may re-age the original date of a delinquency, and if they do so – it is most likely illegal. So pay close attention to your report.
Debt Is No PicnicIf you’re struggling with rolling lates, and the nuisance of a low credit score, consider talking to the financial institutions you owe, about debt management options, and the possibly re-aging of your old debt.
You’re not alone in struggling to keep up with debt. Know that you have options.
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