The terminology varies from credit reporting agency to reporting agency, but regardless of what it’s called, the Date of Last Activity (DLA) is one of the most important items on your credit report.
The DLA determines how a delinquent or charged off account is scored, when the derogatory account is removed from your credit report and even if you can be sued for an unpaid billed.
Who would have thought that a single date could mean so much, but it does.
The DLA tells your potential creditors and the FICO Credit Scoring Model how long ago a bad debt or late payment occurred. The older the delinquency, the less it affects your credit score. Delinquencies and late payments less two years old, significantly reduce your credit score. After two years, the impact of a delinquency on your credit score lessens every few months.
The DLA denotes consumer activity
The DLA does not denote activities like late charges or additional interest charged by the creditor. The DLA is your account activity, not your creditor’s activity. If the DLA is based on your account activity, not the creditor’s activity. If it was, a delinquent account on your credit report would never heal because a creditor could charge interest for years even after they write off your account.
Other than a bankruptcy, derogatory marks on your credit report generally stay there for seven (7) years. After the seven (7) years credit reporting agencies are granted a hundred and eighty (180) day grace period to remove the negative mark from the date of the DLA. That means, a delinquent account or charge off automatically disappears from your credit report about seven (7) years after the DLA.
Whew!!! That’s a long time.
The Statute of Limitation runs from the DLA
The Statute of Limitations is calculated from the DLA. In debt and collections, the Statute of Limitations is a law that sets the maximum time after a default wherein a legal proceedings may be initiated. Technically, the Statute does not prohibit the filing of a lawsuit, but it is an affirmative defense that disposes of the civil action attempting to collect an old debt.
Oops, I’m sorry if I sounded like a lawyer. I will try to do better.
Every state and territory has its own Statute of Limitations, each with its own and specified lengths. Yet with all the differences, every state’s Statute has one thing in common, they all start counting on the DLA.
That a date can mean so much to your credit score is amazing, but it does. When the Credit Monkey evaluates a credit report, one of the first things he looks at is a debt’s DLA. Knowing how old the debt is determines how he proceeds with rehabbing that individuals credit.
Do you know how old your debt is? Now you know how and why to find out.
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