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Credit card re-aging is one way to improve your credit history. (Thinkstock)

Interested in making a big purchase like a house or car, but your credit report is marred by a history of late credit card payments? Believe it or not, there is something you can do to wipe it out.

It’s called credit card re-aging, which requires you to make an agreement with your credit card company to pay off the debt in a lump sum or make consecutive on-time payments. The process allows credit card companies or banks to record accounts as current or up-to-date, according to credit.com.

How It Works

Under such agreements, the site says, a late account that was once recorded by credit reporting agencies as late will be listed as “Paid on time.” Credit.com says some financial institution will erase entire delinquent payment histories and post them as current.

“Most time card companies do not advertise this feature,” Andrea Amir, CEO and founder of smartmoneychicks.com, an online financial advisory group, told NewsOne, “but they will discuss it if you ask about it. Most times, people don’t know that re-aging is the formal name for it and simply ask they can have late payments removed from their credit card histories.”

Most credit counseling programs use credit card re-aging to wipe out debt, she said. And the key after re-aging credit, Amir says, is to avoid falling into the trap of making late payments again.

Amir recommends re-aging to clients who are trying to improve their credit, especially those who have undergone financial hardship. In fact, she says she wishes she had used the process herself before filing bankruptcy twice in the same year near seven years ago.

“It was a lesson learned and I’ve empowered myself through financial literacy so now I can help others,” she said.

When Re-aging Isn’t a Good Thing

But watch out for bad re-aging of credit, Amir said.

What is it? Well, it’s when a collection agency renews the start date of a debt with simple phone call.

Say you are beyond the statute of limitations—usually about seven to 10 years—for a debt collection when suddenly you receive a call about it. Acknowledging the debt or even making a payment arrangement with a debt collector could activate re-aging of the debt, even though you are legally in the clear, according to Credit.com. That means the debt could show up on your credit report as if you fell behind just 30 days ago and it will be another seven to 10 years before it disappears from your credit history.

But it’s illegal, a violation of the Fair Credit Reporting Act. The collection agency could be fined up to $2,500. That’s why, Amir says, it’s important to monitor your history by requesting a free copy of your annual credit report.

“Do not engage when a debt collector calls,” in this case, Amir said. “Just say stop calling and remove my name from your list. If you’ve pulled your credit report, and see that the debt has been renewed, you can change and dispute it through a credit bureau. Don’t’ bother with the collection agency. ”

Further, it’s important to secure all of your agreements in writing, and follow-up in writing yourself because there is always a chance that something could get lost in the computer system, or not recorded in the first place.

“Financial literacy is about education and making informed decisions,” she said. “Once armed with information, we can all make better decisions about our money and how to spend it.”

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