When it comes to collections accounts, you may have heard of an important date known as “Date of Last Activity” or (DLA).
You may have been told not to ever make payments on a collections account, as the action of doing so could change the account’s DLA. In the case that the DLA changes, the clock essentially resets on the seven-year period in which your credit report will expel the collections accounts.
It is also important to note that the DLA will NOT affect your collection account timeline.
Understanding the Seven-Year Period
The seven-year period that you’ve probably heard about all starts at the “Date of First Delinquency” (DOFD), not the DLA or the date that the collection account opens. From a legal standpoint, collection agencies have no right to alter the DOFD. This means that there isn’t any legal or legitimate way in which a company can reset the seven-year period.
However, there are many cases in which people report their collection accounts have been updated as new accounts, even those accounts that were already several years old at the time of the update.
The question becomes,
What is happening in these particular situations?
Well, when a debt collector acquires a collection account, they will sometimes update the DOFD incorrectly so that it reflects the same date that the collection account was opened. Also, if you choose to make a payment on the collection account, the company might use the DLA in place of the DOFD, meaning your new starting date is the date you made the payment.
In these particular situations, these instances explain why the clock might have reset.
It’s important for you to understand, however, that re-aging a collection account is illegal. A collection agency does NOT have the authority to legally report old debts as new collections accounts.
If a collection agency continues to update your credit report with information that is incorrect, or the dates for your opening or date of first activity are wrong, you can legally dispute the information to either have it updated or removed from your report entirely.
Cleaning Up Your Credit Report To Make Room For New
We hope you now have a better understanding of collection accounts and their legal limits.
Fixing any incorrect marks on your credit score is as easy as filing a dispute with the credit company. Once you fix any incorrect marks on your credit report, you might consider finding some ways to increase your score.
If you want to increase your credit score, we recommend authorized user tradelines. You can purchase tradelines to take advantage of years of positive credit history, improving accounts that are in good standing.
In as little as two weeks, you may see improvement in your credit score! Get in touch with us here at Boost Credit 101 to learn more.