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Three Common Misconceptions About Negative Credit Reporting and Timing


Clearing up confusion when it comes to credit reporting and credit scoring.


Misconception No. 3

If a creditor sells a defaulted debt to a debt buyer or collection agency, the buyer can report the collection to the credit bureaus for seven years from that time.

Correction: One of nasty words in my industry is "re-aging."

Re-aging, in the credit reporting world, is when a creditor or collector changes the date from which the 7-year credit reporting period begins to make it more recent, thus causing an item to remain on a credit report longer than the seven years allowed by Federal law.

Re-aging violates the Fair Credit Reporting Act, the Fair Debt Collection Practices Act, and countless state equivalents to those Federal laws.

It is a common (and completely legal) practice for a debt buyer to purchase defaulted debt from a creditor and then attempt to collect those debts. It is also common (and completely legal) for a debt buyer to sell those debts to another debt buyer so that the newest buyer can then attempt to collect those debts.

Again, this is completely legal. What is not legal is for any owner of the debt, present or past, to cause the "purge from" date associated with any negative credit report entry to be updated so that it causes the negative item to remain on a credit report longer than seven years from the original account's charge off date.

Editor's Note: This article by John Ulzheimer was originally published on MintLife.

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