It can be alarming to learn that previously removed information has re-appeared on a consumer credit report. It is particularly alarming when the removal and re-appearance causes the consumer's credit score to yo-yo unpredictably. So, what can be done when old information returns to haunt a current credit score?
First, the consumer should identify the type of information, the original date of the information, and the current status of the information.
If the re-appearing information is not a debt but rather a closed account that re-appears as ‘active', the consumer should try contacting the creditor directly to obtain confirmation that the account is closed and to request that the creditor update or correct the status of that account with the credit reporting agency(ies). If the creditor fails to correct the information, the consumer can open a dispute with one or more credit reporters, as applicable, and send the creditor's confirmation of account closure as supporting evidence of the account's true status.
If the re-appeared information is a debt with a different fall-off or origination date, the debt was likely re-aged. Re-aging occurs when old debt that cannot be collected by legal action due to the running of the statute of limitations is updated as new debt. Re-aging not only restarts the clock on enforcing collection, it also resets the origination date for debt that might have fallen off a consumer's credit report (e.g., a collection account more than 7 years old).
If the re-appeared information appears to be a re-aged debt, the consumer should then determine whether the re-aging was lawful or, as commonly occurs, the result of bad faith reporting by an unscrupulous collector.
Even after the statute of limitations has run on an unpaid debt (typically 3 to 10 years depending on the state; 4 years in California for most debts based on written agreement), the clock can restart if the debtor takes certain action, even if the debtor never intended to reset the timeframe for collection. For example, a debtor can inadvertently refresh an old debt by making a payment in good faith or even by simply acknowledging the debt to the creditor or collector.
If the re-appeared debt is based on an account that the consumer is certain they haven't paid on or spoken to the creditor about since the debt's actual origination date, the information was most likely re-aged illegally. Illegal re-aging most commonly occurs when old debt is re-sold to one or more collection agencies. Even though the age of the debt does not refresh just because it gets a new owner, downstream collectors will occasionally report the debt as ‘new' in order to affect the consumer's credit score and bully the unwary consumer into paying off the old debt.
When a consumer suspects re-appeared information is due to illegal re-aging, they should first file a dispute with the credit reporting agency(ies) and NOT contact the collector, as doing so could result in valid re-aging. If the debt was truly re-aged without cause, the credit reporter should correct or remove the information within 30 days. If, for any reason, the credit reporter (i.e., TransUnion, Equifax, or Experian) determines the re-appeared information is valid, the consumer may have no choice but to attempt negotiations with the creditor or collector. They should, however, consult legal counsel before contacting a past or current owner of the debt to ensure that doing so does not result in unintended consequences.