Vision Credit Education, Inc.

When you fall behind on credit card payments, late fees and past due payments can make catching up nearly impossible. It requires that you tighten the belt and send as much money as you can to get caught up. If your payments have become unaffordable though, then you must consider getting help through credit counseling. Their programs include a benefit where many major creditors reset your accounts by re-aging them.

What is a Re-age?

When a creditor re-ages your account, they agree to restore current status. This change in status provides multiple benefits.

First, you no longer are required to pay for arrears. Instead of catching up through sending in back payments in addition to your current month’s payment, you can now send one payment each month. This is important when your budget is already stretched.

Second, you can say goodbye to late fees. That $39 to $45 a month that you were getting charged as a penalty goes away when your account is current.

A third major benefit to an account re-age is that your creditors can now report your current status to the credit bureaus. While your late payments will still be on record for 7 years, your scores will jump when your current status is reported. This current status will outweigh older late payments in your credit report, which will allow your scores to continue to climb as long as you maintain that current status.

Major credit card companies are restricted in how often they can re-age an account. You should understand that you may only get a maximum of 2 chances over a 5 year period to re-age your accounts. Therefore, they will not make the decision lightly. They want to make sure that you are serious about maintaining your account.

When you enroll in a debt management program, it provides proof to your creditors that you are committed to getting back on track. They will compare your program summary with your credit report to make sure that you are enrolling all of your credit card accounts. If they see multiple accounts with balances left off the program, there is a possibility that they may deny benefits until you have added those accounts. That is why it is imperative that you include all of your unsecured debt for maximum benefit.

To see how re-aging through credit counseling can benefit you, imagine this scenario. You have a credit card with a $200 a month payment. If you miss a payment, your next month may require $447 as a minimum payment rather than your usual $200. This includes 2 months payments, additional finance charges on your higher balance and a late fee. If you dare fall 2 months late, your interest rate will skyrocket to 29.99% or more, depending on the penalty rate on your account.

By enrolling in a debt management program, your creditor can re-age your account. Instead of a $447 minimum payment, your new monthly payment might be $160. Your payment could be lower or higher than this example. Your new payment primarily depends on which creditors you owe as well as specific details on those accounts.

If you fail to receive credit counseling before your accounts are charged off as bad debts, you lose the right to a re-age as well as the other benefits of a debt management program, such as lower interest rates, reduced payments and a rebuilding of your credit rating. You only have a limited window to act. Once an account approaches 4-6 months late, you can expect your lender to provide final notice of charge-off. If you miss their ultimatum, you get to deal with the nasty collection agents that will pursue collection of the defaulted debt. For more information about re-aging your past due credit cards, contact our financial counselors today.