Note:  The article below comes from the one and only man in the entire world that I trust on the issue of credit repair:  Mr. Mike Payne.  If you or any of your customers/buyers/renters are in need of advice and strategy regarding credit repair, Mike is the guy to give it to you.  Of course, like every other page on this site, this information is for educational purposes only and does not constitute legal or professional advice.  Enjoy this article, and let me know if you’d like to hear more from Mike in the future.

Rochelle T. of Odessa, TX, discoverd one deadly debt collection trick that gets her credit application rejected and (allowed) one nasty debt collector to keep squeezing her for money.

By no means is Rochelle the first or the last to experience this dangerous and very common debt collection trick, as more and more debt collectors are turning up the heat on uninformed debtors for the sole purpose of collecting money.

The debt collector’s trick you need to understand is RE-AGING and in this article you will discover what re-aging is, why real estate investors with perfect credit need to know about re-aging & how to fight back from illegally re-aged credit accounts.

What is Re-Aging?

Re-aging is the act of reporting inaccurately by a Furnisher (that is, original creditor, debt collector or even junk debt buyer) the Date of First Delinquency to credit reporting agencies, i.e. Transunion, Equifax & Experian.

Clearly, debt collectors illegally RE-AGE bad credit accounts for the sole purpose of extending the legal time limits for collecting on an alleged debt!

Ignorance is not bliss!

Rochelle did what everybody in a similar situation seems to do: she filled out a credit application only to get it rejected. When the credit manager told her about “…recent bad credit on her file,” Rochelle shook her head, questioning what he was talking about.

Since Rochelle didn’t have any “recent” bad credit, she sought out my advice on the matter.

Uncovering the debt collectors’ “Re-Aging” trick…

According to Rochelle, “…I had a charge off from a credit card that was back in October 2003.”

NOTE: Rochelle last made a payment on this credit card in September 2003, making the Date of First Delinquency October 2003.

Further, Rochelle shared with me that, “…recently, a new company just bought the debt and the new debt collector is telling me the bad account will be on my credit until December 2013….”

Once Rochelle faxed me the page from her Equifax credit report, I saw the violation.

Rochelle had no proof she stopped paying in September, prompting her to pay for cancelled checks from her bank and proving when she last paid her credit card bill.

It’s The Date Of First Delinquency!

Therefore, the Date of First Delinquency is October 2003. That’s the date that matters.  That’s the date that must be reported.

An alleged bad account can [and often will] be passed to 10,000 different collectors every 60-90 days, but the “default date” (date of first delinquency) should never change on a credit report.

NOTE: September 2003 was the last payment she made. Therefore, October 2003 is the Date of First Delinquency. Let’s be clear. The date should (not) change, but the date WILL change.

Creditors change the date that the debt goes bad (also known as the “commencement of the delinquency,” “date of last activity” or simply the “date of first delinquency”). They like to report the date as the date they bought the debt from the original creditor, not the date the debt goes bad.

I shared the following chart with Rochelle and helped her develop strategy for overcoming this re-aged account:

What’s So Bad About Re-Aged Accounts?

What’s so bad about re-aged accounts is that (alleged) debt shows current. Any credit activity within the most recent 24 months weighs more heavily on a person’s FICO than older credit activity. Rochelle’s credit scores are getting hammered.

NOTE: Thirty-five percent (35%) of a person’s credit score comes from payment history…35 percent!

Let me repeat: A person’s credit scores derive from all credit activity within the most recent 24 months and 35% of a person’s credit scores come from payment history.

When a debt collector takes an OLD account and makes it a RECENT account, the debt collector:

  1. Extends the time for attempting to squeeze money out of the alleged debtor.
  2. Hammers the debtor’s FICO with what appears to be a current derogatory account.

How To Fight Back Against This One Deadly Debt Collection Abuse?

Once you confirm the debt is re-aged (that is, you have proof the account is re-aged), it’s time to go on the offensive.

  1. Get proof of Date of First Delinquency – Rochelle paid for cancelled checks from her bank.
  2. Confirm Statute of Limitations on debt collecting in the state in which debt commenced and/or state in which you currently live.  (For Rochelle, the state is Texas and the state’s SOL is 4 years. Four years
    from October 2003 is October 2007. Clearly, this debt is time-barred, meaning a debt collector will not prevail in court… Of course, a debt collector still can sue, though Rochelle will respond to the Summons and show the judge the debt is timebarred. Game over.)
  3. Send each credit bureau reporting this inaccurate account a dispute letter citing the re-aged account.
  4. Send the collection agency an ITS (Intent to Sue) Notice and demand payment for violations (see chart above).

Re-aging without the debtor’s written permission is illegal. Regardless of how many times the account is bought and sold, the Date Of First Delinquency remains the same and begins the clock on the Statute of Limitations wipes the debt collector out.

How do sneaky debt collectors get uninformed consumers to re-age LEGALLY their own accounts about to expire? This is really sneaky and 100% legal. With huge profits involved, original creditors and debt collectors rely on tricks to trap people, sometimes risking prosecution by the Federal Trade Commission to steal and harass people who do not know their rights.

To discover how debt collectors get people to re-age their own accounts, please go to http://www.FixMyUglyCredit.com.