Creditors are well aware that people do fall into unforeseen negative financial circumstances, that ultimately affects their credit rating and this is where re-aging delinquent accounts can be most beneficial.
What is Re-aging?
When re-aging delinquent accounts is utilized it has the ability to repair and improve damaged credit scores that happened as a result of unavoidable circumstances. Although it does have its benefits it can have a negative impact as well. A positive re-aging of the delinquent accounts, gives an individual the opportunity to rebuild their credit rating quickly. There are some cases though where re-aging delinquent accounts is done in a negative way. This is where the status of the account which is delinquent is made to appear as if it is a recent occurrence, leading one to believe that recent unforeseen circumstances have created the problem, when this in fact is not true. This type of action is illegal.
If this type of negative technique was used, then it means that the particular collection it was applied to would be on your credit report beyond the seven years allowable. The fair credit reporting act stipulates that delinquent accounts can only remain on a credit report for a maximum of seven years.
How to Re-age a Delinquent Account?
Assuming though that for valid reasons you want to have the delinquent account re-aged you must be prepared to make minimum payments from that point forward. You need to notify the creditors involved in writing. Give a full explanation as to why the account went into arrears, and what steps you have taken to ensure that you will be able to meet future obligations regarding the debt. Once the process has been put into effect the account is not considered as past due, but the status on the credit report is changed to current.
With the proper negotiations with your creditors you may be able to halt the late fees, and just basically start fresh although you still owe the amount of money as stated. What has happened here is the creditor no longer recognizes that there were any missed payments.
Something you may want to keep in mind though is your past credit record. If you have been paying on that account for several years and it was in good standing, then by re-aging delinquent accounts you are also eliminating your past credit history. This may not seem like a big deal but you have to realize that credit scores are based on the length of your credit history, so in fact by taking this step you may be actually reducing your credit score.
Reference: Rebuild Credit Scores by Lisa Philips, site viewed on November 20, 2010
Unnikrishnan k - I am a 25 year old freelance writer, graduated in Electronics Engineering . I have been writing for last on year for Digitaljournal and ...
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