Working to rebuild damaged credit can be a long and often frustrating process. But there is a silver lining you can cling to if you’re working to recover from past credit mistakes. Although negative information can have a negative impact to your credit reports and credit scores, those blemishes usually cannot remain on your credit reports indefinitely.
A federal law known as the Fair Credit Reporting Act (FCRA) puts limitations on how long derogatory items are permitted to stay on your credit reports. In most cases, the credit bureaus must remove negative items from your credit reports after either seven or 10 years. Re-aging, the subject of this article, is an example of how negative information can be caused to remain on your credit reports longer than allowed. But what is re-aging, and how can it impact credit reports and scores?
In very rare cases a consumer may argue or believe that a lender or collection agency re-aged an item on their credit reports. To be clear, in the credit reporting context re-aging is illegal. And, in some cases, re-aging might hurt your credit scores as well.
Re-aging does not happen often, but here’s what you should know about what it means and how it occurs.
As mentioned, most of the negative information on your credit reports comes with a credit reporting time limit. Once that time limit is up, the credit bureaus must purge the derogatory item in question from your credit reports.
Different types of negative information have different purge rules where credit reporting is concerned. Here’s a quick cheat sheet that explains how long various items can stay on your credit report.
Collection Accounts: 7 Years
Charged Off Accounts: 7 Years
Repossessions: 7 Years
Foreclosures: 7 Years
If you have any of the negative information above on your credit reports, it likely indicates that you defaulted on a debt. In each of these situations, a credit bureau can report the item for up to seven years from a date called the Date of First Delinquency.
The Date of First Delinquency, or DoFD, is an important date for a credit bureau to track. By keeping tabs on this “anchor” date, a credit bureau knows when it needs to start the 7-year credit reporting clock and delete a negative item from a credit report in order to remain compliant with the FCRA.
Re-aging occurs when the DoFD is intentionally changed to be more recent than factually accurate, which is not legal. The only time a DoFD can be affirmatively changed to be more recent is if it was being incorrectly reported and the update is simply a correction.
This represents the one and only definition of re-aging. When the discussion is about credit reporting, there are no other accurate definitions of the term. In fact, this definition is shared by multiple authoritative sources including the credit bureaus, the National Consumer Law Center, and the Consumer Financial Protection Bureau.
As you can probably assume, there is no upside to re-aging. Companies that re-age can find themselves on the wrong side of FCRA litigation and regulatory actions. But that’s not where the potential harm of re-aging ends.
Since the date of first delinquency determines when credit bureaus will delete negative entries from your credit reports, re-aging and updating the DoFD to something more recent could cause the account to stay on your credit report longer than the FCRA allows. Re-aging can also cause credit scoring systems to incorrectly interpret a negative entry as being newer, which can result in a lower score.
Re-aging is widely regarded as being illegal, but it isn’t a wide-spread problem that affects a large percentage of consumers. In fact, examples of actual re-aging are relatively uncommon. However, if you suspect that you are a victim of re-aging, you should do something about it. You have the right to dispute any item on your credit reports that you believe to be incorrect and the credit bureau (or credit bureaus) in question must investigate the matter and make any necessary corrections.