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According to the Fair Credit Reporting Act (FCRA), debt in collections can only stay on your credit report for seven years plus 180 days after the date of first delinquency (DOFD).
However, if your debt has been purchased by a collection agency, these debts might still appear in your report in error after that designated time period is up. This practice of “re-aging” debt, whether intentional or not, is illegal—and it can destroy your credit if you don’t know what to do about it.
That’s why it’s important to know what rights you have under the FCRA and how old debt might reappear on your credit report due to debt re-aging.
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How the Fair Credit Reporting Act works
The FCRA is part of the Consumer Credit Protection Act, passed in 1970 to ensure consumers’ access to their credit information is more transparent and that their privacy is safeguarded in credit reporting. Most importantly, the FCRA enforces fair and accurate reporting, which benefits consumers.
While the FCRA is a long document that outlines many rights designed to protect you, there are a few key points you should know as a consumer:
- You must be told if information in your credit report has been used against you
- You have the right to ask what your credit score is and know what information is in your file
- You have the right to dispute incomplete or inaccurate information
- Consumer credit agencies cannot report outdated negative information
If you notice an error in your credit report, it’s up to you to act. In fact, many experts recommend checking your credit report at least once a year for accuracy. Federal law ensures you can check your file from each national credit bureau for free once a year at AnnualCreditReport.com.
Additionally, it’s helpful to monitor your credit score from month to month. Your credit score can usually be found on your monthly credit card statement or on some free budgeting apps.
Related article: A Guide to Everything You Want to Know About Credit
Staying on top of potential issues with your credit is an important part of maintaining a healthy financial life. Knowing your rights under the FCRA especially will empower you to advocate for yourself and make things right if you’re being contacted illegally by a creditor or you notice something out of place on your credit report.
What is debt re-aging?
As mentioned above, debt that has gone into collections can only stay on your credit reports for seven years plus 180 days after DOFD. (Unfortunately for us all, however, this does not mean that you no longer have to pay the debt after that time period passes.)
Debt re-aging, however, means that the DOFD has been moved on your reports to show that a bill first went unpaid later than it actually did—and thus it will stay on your credit report longer. For example, if you didn’t pay a bill that was due in October of 2019 but your credit report shows that it was due in October of 2020, that means your debt has been re-aged.
Debt re-aging is a complicated process to understand, largely because it can be harmful and illegal in some circumstances but helpful to consumers in others.
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Illegal debt re-aging
When your debts are charged off by your creditor—meaning they’ve been delinquent, or unpaid, for four to six months—the creditor will most likely sell the debt to a collection agency. When this happens, two new events will show up in your credit report:
- The balance on your delinquent account with your original creditor will change to zero
- A new entry will open under the “Collections” section
When your account enters collections, you’ll likely be contacted relentlessly by the agency via phone, mail, and so on. A particularly aggressive collector might even try to contact your family members or other people in your life. (Note: a debt collector can only reach out to people in your life to find out the best way to contact you, but they are not legally allowed to talk to those people about your debt.)
Related Article: Top 5 FAQs About Dealing with Debt Collectors
When your debt is purchased by a collection agency, it’s possible that it could be re-aged on your credit report—sometimes unintentionally, but occasionally on purpose. Either way, it is illegal, and the collector is violating your rights under the FCRA by incorrectly reporting the DOFD.
Re-aged debt is harmful to your credit for two key reasons:
- It appears in your report as a new delinquent debt, instead of an old debt owned by a new entity
- A later DOFD gives the collector more time to attempt to collect your debt within the statute of limitations on repayment
Since it stays on your credit report for that seven-years-plus-180-days period, re-aged debt will negatively affect your credit score longer than it should.
Positive debt re-aging
Even if you’re making regular payments on a past-due account to try to catch up, those rolling payments could still be reported as late each month—and thus could harm your credit score. When late fees are accumulating and you don’t know how to repay them while also making regular payments, “positively” re-aging your debt could help.
So what is positive debt re-aging, and why isn’t it illegal?
Sometimes a borrower might come to an agreement with their lender to make regular payments, typically as part of a debt repayment plan. While this is commonly referred to as “re-aging,” it is not the same as illegal debt re-aging because it doesn’t involve reporting incorrect information to credit bureaus about the account’s DOFD.
To positively re-age your debt, your creditor might make your past-due payments current and/or waive any incurred late fees. Usually, this arrangement is more agreeable to a lender when you make a few consecutive months of on-time payments.
The one caveat to positively re-aging your debt is that the record of your previous late payments will not be expunged—which is why this differs from illegal debt re-aging. Your past late payments will remain on your credit report, but making regular payments after coming to an agreement with your creditor could still help you rebuild your credit.
Many people find that working with a knowledgeable debt specialist to help them negotiate arrangements with their creditors helps. We at JG Wentworth, for instance, can help our customers create these custom debt repayment plans by working directly with their creditors, allowing them to pay off their debts in as few as 24 to 48 months—and even lowering their overall debt balances!*
If you’re interested in learning more about JG Wentworth’s Debt Resolution Program and how we could help you reduce your debt and pay it off faster, call (888) 505-1794 today to speak to one of our debt specialists.
Sources cited
- Fair Credit Reporting Act. Federal Trade Commission. Retrieved from 545a_fair-credit-reporting-act-0918.pdf
- A summary of your rights under the Fair Credit Reporting Act. Consumer Financial Protection Bureau. Retrieved from bcfp_consumer-rights-summary_2018-09.pdf
- Experian. Understanding the fair credit reporting act. Retrieved from fair-credit-reporting-act-fcra
- Akin, J. (2019, July 22). What is a charge-off? Experian. Retrieved from what-is-a-charge-off
- Can debt collectors tell other people, like family, friends, or my employer, about my debt? Consumer Financial Protection Bureau. (2022, August 24). Retrieved from can-debt-collectors-tell-other-people-like-family-friends-or-my-employer-about-my-debt-en-332
- DeNicola, L. (2020, June 9). What is account re-aging? Experian. Retrieved October 21, 2022, from what-is-account-re-aging
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The information on this blog is provided for educational and informational purposes only. Such information or materials do not constitute and are not intended to provide legal, accounting, or tax advice and should not be relied on in that respect. We suggest that you consult an attorney, accountant, and/or financial advisor to answer any financial or legal questions.
Debt solutions program provided by JGW Debt Settlement, LLC (“JGW” of “Us”)). JGW offers this program in the following states: AL, AK, AZ, AR, CA, CO, FL, ID, IN, IA, KY, LA, MD, MA, MI, MS, MO, MT, NE, NM, NY, NC, OK, PA, SD, TN, TX, UT, VA, DC, and WI. If a consumer residing in CT, GA, HI, IL, KS, ME, NH, NJ, OH, RI, SC and VT contacts Us we may connect them with a law firm that provides debt solutions services in their state. JGW is licensed/registered to provide debt solutions services in states where licensing/registration is required.
Debt solutions program results will vary by individual situation. As such, debt solutions services are not appropriate for everyone. Not all debts are eligible for enrollment. Not all individuals who enroll complete our program for various reasons, including their ability to save sufficient funds. Savings resulting from successful negotiations may result in tax consequences, please consult with a tax professional regarding these consequences. The use of the debt solutions services and the failure to make payments to creditors: (1) Will likely adversely affect your creditworthiness (credit rating/credit score) and make it harder to obtain credit; (2) May result in your being subject to collections or being sued by creditors or debt collectors; and (3) May increase the amount of money you owe due to the accrual of fees and interest by creditors or debt collectors. Failure to pay your monthly bills in a timely manner will result in increased balances and will harm your credit rating. Not all creditors will agree to reduce principal balance, and they may pursue collection, including lawsuits. JGW’s fees are calculated based on a percentage of the debt enrolled in the program. Read and understand the program agreement prior to enrollment.
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