Beware of “re-aging”

Consumers with bad credit may be in the position that they’re in because of “charge-offs,” or debts written off by companies as uncollectable, from earlier in life. These negative notices can remain on a credit report for up to seven years. Yet some borrowers may notice that these old debts are still affecting them after that time period has expired.

The reason may be a practice known as “re-aging.” When a company realizes that they will likely not be able to collect a debt, they often sell it to a debt collection agency, who will use a number of tactics in order to do so. One of these was “re-aging.” A poor notice only remains on a credit report for seven years. Yet the collection agency, in a bid to get the money, would report the debt a second time, meaning that the same debt showed up years later on the same credit report, hurting the score even more and adding more years to the life of the negative info.

This practice was banned by a federal law passed this decade, but consumers who haven’t carefully examined their credit report may be dealing with a re-aged charge-off and not even know it. Luckily, consumers can challenge these notices and get them removed from their credit report, which will raise their credit score and make them better qualified for car loans, mortgages and credit cards.