Wednesday, August 8, 2012

Re-aging Delinquent Lowe's Credit Card Account

Reader Question:

Lee,

I recently moved to a new area. I have a credit account with Lowe's. I called Lowe's and gave them my new address. I know they had the proper address because I got a credit card statement from them a couple weeks after I moved in. That statement in May was the last one I ever got. After that I got nothing from them, no bills, no statements, nothing. I am not signed up for automatic bill pay, so I should have been getting bills but the bills never came! 

It took me a while to realize that I should have been getting bills and wasn't. I know its my responsibility to pay whether I get a bill in the mail or not, but the bill itself is what reminds me to pay. Anyway, as soon as I realized I hadn't been getting bills I called Lowe's and asked about it. As it turns out my account was over 60 days late and had racked up tons of late fees and interest fees. 

The customer service rep for Lowe's said that they had been sending mail to my new house but that most of the mail had been returned. That makes no sense since I received the first bill with no issues. The rep waived the interest charges and late fees on the account and brought it current. When I asked how this would affect my credit score, she said that a 30 day late takes 90 days and that she had re-aged the account anyway so it didn't matter. 

I felt good about it when I got off the phone but now I'm getting nervous. I'm not sure if I believe that a 30 day late takes 90 days, and isn't re-aging accounts a bad thing that would hurt my credit rather than help it? 


Brooklynn



Brooklynn,

I can't explain why some of the Lowe's credit card bills and statements are arriving in your mailbox and some are being sent back to Lowe's headquarters, but I can explain about the late payment notations and the account re-aging.

30-day lates are notoriously misleading. For companies that send reports to the credit bureaus every 30 days, a 30 day late appears on the credit report of any cardholder whose account was 1-30 days late when the credit card company sent in its report. The kicker here is that not all companies file reports with the credit bureaus every 30 days. From what the Lowe's credit card rep is telling you, it sounds like Lowe's only  makes credit bureau reports every 90 days. If this is the case, however, your credit report would reflect a 30 day late, a 60 day late and, if you passed the 90 day mark, a 90 day late. You definitely don't want that to happen. Each late payment notation builds on the one before it. By the time you reach a 90 day late, your credit has been decimated.

As far as your account being re-aged is concerned, there is a big difference between collection agency re-aging and credit card company re-aging. When a collection agency re-ages an account, it alters the original dates on the account to make the account appear more recent. Not only does this mean the debt knocks out a bigger chunk of your credit score (since recent items carry a greater weight in the credit scoring formula) but it also tricks the credit bureaus into leaving the bad debt on your credit report for longer than the 7-year reporting period. Collection agency re-aging is a nasty business, and very illegal.

Credit card company re-aging, however, is beneficial. When a credit card company re-ages your account, it brings the account out of delinquency and erases the delinquent history. Depending on how the Lowe's credit card company's computer reporting system is set up, this can eliminate any late payments that have already been reported to the credit bureaus.

Keep in mind that customer representatives at credit card companies often know little to nothing about credit scores and reporting practices. They will often say whatever they need to say to get you off the phone – especially if you're asking questions they don't have the answers to. I'm not saying this was necessarily what happened in your case, only that its possible.

If Lowe's actually did clean up the mess, then good for them. It's not often that customer service representatives are willing to help a customer out without that customer taking drastic action or demanding to speak with a supervisor. If I were in your situation, I would go pull a copy of my credit report from each of the three credit bureaus and review it, just to be safe. If you find late payments, its time to call Lowe's credit card services again, but skip the customer service representative and ask to be immediately transferred to a supervisor. It's awesome that they re-aged your credit card account, but if they didn't erase the late payments as well then they still have work to do.

Best of luck,
Lee


*Do you have a question for Lee? Send an email containing your question to LeeEdwards@mail.com and your question may be the subject of an upcoming post. 

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