Date of Last Activity (DLA): What Is It and Does It Really Matter? – Credit Countdown With John Ulzheimer

June 25, 2021CreditBy toptierfinancial

Credit Countdown: What Is a Date of Last Activity? - PinterestThe “date of last activity,” also known as the DLA, is often discussed within the field of credit repair in a way that is inaccurate or misleading. Because of this, many consumers do not understand the true significance (or lack thereof) of the DLA as it relates to their credit reports and credit scores.

Credit expert John Ulzheimer busted some myths about DLAs in a Credit Countdown video on the Tradeline Supply Company, LLC YouTube channel. Here’s what he had to say about DLAs on your credit report.

What Is a DLA (Date of Last Activity)?

The date of last activity is exactly what it sounds like: it is the most recent date on which activity was reported for an account.

It is a “legacy” data point that used to be included on credit reports for users (lenders), but this is not the case anymore, In fact, DLAs have not been shown on credit reports for lenders in decades, according to John.

Why Does a DLA Appear on Your Credit Report?

If John is saying that DLAs do not appear on credit reports, then why do you see DLAs when you pull your own credit report?

Two Types of Credit Reports

If you’ve watched our other Credit Countdown YouTube videos, then you may recall that there are two types of credit reports: “real” credit reports, and credit report disclosures.

Credit Report Disclosures

When you check your own credit report from annualcreditreport.com or from the credit bureaus, you are actually looking at a credit report disclosure.

Disclosures are provided to consumers and presented in a format that consumers can understand.

This is not the same as the version of your credit report that lenders see, and it contains different types of information, such as DLAs, that may be helpful to you as a consumer.

Credit Reports

Real credit reports are written in code using software known as Metro 2 and these documents are provided to “users” such as lenders, insurance companies, collection agencies, credit unions, credit card issuers, and mortgage brokers.

Actual credit reports do not contain DLAs. If you were to search the Credit Reporting Resource Guide (CRRG), which is essentially the Metro 2 manual, you would not find any information about DLAs because they do not exist within this credit reporting system.

Credit reports provided to lenders are communicated using the Metro 2 language.

Credit reports provided to lenders are communicated using the Metro 2 language.

Conclusion: Do DLAs Affect Your Credit?

You can rest assured that you do not need to worry about DLAs as they pertain to your credit reports and your credit scores (although they may be important for legal reasons, such as determining the statute of limitations for old debts).

Since DLAs do not appear on your actual credit reports that your credit scores are based on, they cannot impact your credit.

If you’d like to watch the video version of this post, hit play below. You can find the rest of our Credit Countdown videos over on YouTube!

 

Read more: tradelinesupply.com

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What is the Statute of Limitations for Medical Debt?

June 25, 2021CreditBy toptierfinancial

Medical debt is a major problem for millions of Americans. It has been one of the leading causes of bankruptcy, and the sky-high costs of medical treatment are well documented. There are steps you can take to keep your medical bills in check, however that may not be much consolation if you have already accumulated significant medical debt.

Like with any debt, you will want to make a game plan for how to manage it and meet your obligations. Of course, this includes the usual strategies like budgeting and cutting costs in order to free up your income.

However, you will also want to know your rights when it comes to medical debt. One important thing to be aware of is the statute of limitations, which will be determined by your state’s law. Let’s take a look at more specifics.

What are Statutes of Limitations?
If you aren’t familiar with this concept, the term “statute of limitations” (sometimes shortened to “SOL”) may seem confusing, and it certainly is a mouthful. It’s actually quite simple, though. A “statute” is a written law, and “limitations” refers to the “limit” related to when a claim can be brought in court. So, the statute of limitations essentially refers to the time limit for which someone can sue about a particular issue.

That may be a slight oversimplification, however, because in practice the statute of limitations functions as a defense in court rather than an automatic way to prevent a party from suing. In other words, if Party A sues Party B for a medical debt that is past the statute of limitations, Party B will not automatically win. Party B should seek the counsel of an attorney, and will need to appropriately acknowledge and respond to the lawsuit and raise the statute of limitations as an issue.

This quirk is one reason why “zombie debt” can be so problematic. In some cases, people don’t legally owe a debt anymore, but a creditor is able to bring it back to life by suing the debtor or even threatening the debtor into making a promise to pay (even after the SOL). Note: in most cases, a creditor may still contact you about a debt even after the SOL has passed.

Which Statute of Limitations is Relevant?
Every state has its own statutes of limitations for different types of debt. These typically include written contracts, oral contracts, promissory notes, and open-ended contracts. In many cases, the statute of limitations will vary depending on which category a given debt falls under.

In most cases, medical debt is considered a written contract. After all, think about all the paperwork you typically fill out when going to the doctor! According to NOLO, the statute of limitations for written contracts ranges from three years to ten years across states. Check out this chart and consider double checking it against your states’ law (and read below about how some states are adding new SOLs for medical debt).

Why a Shorter SOL is more Favorable
A shorter statute of limitations is considered more consumer-friendly. By shortening the window of time in which you can be sued, a short SOL provides greater certainty. In states with long SOLs, consumers may have the rude surprise of a last-minute lawsuit after nearly 10 years of a creditor not taking action on a given debt. A shorter SOL forces the creditor to take action sooner, and if it doesn’t then the consumer can have some peace of mind about their legal rights.

With this in mind, some states are beginning to pass SOLs for medical debts specifically, rather than essentially bundling medical debts in with the broader category of written contracts. New York made such a legislative change in 2020, reducing its statute of limitations on medical debt to three years.

Know Your Rights
If you find yourself in a position where you need to know the statute of limitations, you could consult the chart linked previously in this article and do additional research into your state law to confirm that it is correct. Also, consider contacting an attorney or local legal aid organization if you are unsure. It is very important to remember your rights and be prepared for creditors to continue contacting you. Make sure you understand the pitfalls surrounding so-called “zombie debt” and are ready for any communications about debts you owe or owed previously.

For more help with your debt management, remember that our certified credit counselors are here to help. You can get started with a no-cost counseling session today.

The post What is the Statute of Limitations for Medical Debt? appeared first on NFCC.

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