Late payments are the bane of the existence of any troubled consumer.
By paying off a credit, car loan, or mortgage after the payment is due, borrowers trigger an avalanche of negative outcomes, including higher interest rates, late payment fees, and lower credit scores. among other financial headaches.
Lenders and creditors take payments seriously, as do the credit reporting agencies that track and generate a consumer’s credit score:
- One of the most important parts of your FICO credit score is your bill payment history – the major financial benchmark lenders used to assess your credit risk. Payment history represents 35% of your credit score.
- According to FICO, a single 30-day late payment can reduce up to 110 points on a credit score of 780.
- A late payment to a credit card company, for example, can turn a 15% interest rate on a credit card into a higher interest of 20% or more, even though you only paid once late.
- A lower credit score resulting from late payments can cause you to lose a mortgage, an apartment rental (yes, landlords check credit scores), or even a job (many employers also check credit).
- A late payment, left untouched and unsecured, will remain on your credit report for seven years.
That’s why it’s imperative that you pay your bills on time and every time. That will double for the bills that credit rating agencies follow the most aggressively – things like credit cards, auto loans, mortgages, and home equity loans.
By avoiding late payments on these types of credit accounts, you will keep your interest rates low, your credit score high, and more money in your pocket. If not, late payments will cause you seemingly endless personal financial problems that are difficult to entangle.
How to remove late payments from your credit report
The situation is not hopeless. Even if you pay a late bill and it hurts your credit rating, there are remedies that can help you eliminate the late payment and get back on your way to financial health.
These eight action steps can help you get the job done and get back on the path to great personal financial health:
1. Get a copy of your credit report
If you’ve paid a late bill, think you have, or want to know the impact of a late payment on your credit, your first step is to get a copy of your credit report and check it out. check carefully.
You can get a free copy of your credit report once a year at annualcreditreport.com, which will send you a copy of your credit report from the three major credit rating agencies – Transunion
(UTR) – Get the TransUnion report , Experiential
(EXPGIE) , and Equifax
(EFX) – Get the report from Equifax Inc. . It is also possible to get your credit reports inexpensively from any of the above credit reporting agencies. Just go to the agency’s website where you will find instructions for getting a free credit report (once a year) which will be sent directly to you.
Just getting your credit report won’t eliminate late payments on a report, but it is the primary tool needed to clear a late payment from your credit report and avoid harsher financial penalties. The main goal is to use your credit report to check for late payments so that you can begin the process of getting rid of them.
2. Check your report for errors
Once you have your credit report on hand, review it carefully to see if the overdue payments that appear on the report are valid. Errors occur all the time with communication between creditors and credit bureaus, and on-time payment may be listed as late payment due to coding error or administrative error.
Make sure you have good records of your bill payments, especially larger ones like mortgage or credit card payments. You will need the records to match your actual bill payments with the late payments listed on your credit report.
3. Request that late payment information be removed from your credit report
If you find an error or discrepancy and think that you have good arguments in favor of its deletion, formally ask the
in question (that’s why it’s important to look at the credit reports of the three major bureaus – what’s on one report may not be on another credit report.)
By law, if a credit reporting agency can’t verify that a late payment included in your report is valid, they must remove it from your credit report. The three major credit bureaus make it easy for you to make such a request online. Experian, for example, has an online “dispute center” where you can request that items be removed from your credit report. You can make the same request by phone or by mail.
Here is the information you need to file a dispute with the three major credit bureaus:
Transunion. TransUnion LLC Consumer Credit Bureau Litigation Information
PO Box 2000 Dispute Center Chester, PA 19016
Phone: 800-916-8800 – 8 a.m. to 11 p.m. EST
Experiential. Experian Litigation PO Box 4500 Allen, TX 75013
Telephone: (714) 830-7000
Equifax. Equifax Information Services LLC PO Box 740256 Atlanta, GA 30374 Online: https://www.equifax.com/personal/disputes
Telephone: (800) 846-5279
4. Make a complaint to Uncle Sam
If you don’t get satisfaction from all three credit bureaus, you can move up the ranks and argue for a late payment credit report error with the Consumer Financial Protection Bureau. The CFPB offers a remedy for consumers who cannot resolve a late payment problem, but it may take some time. Start this process and get additional advice on
consumer credit dispute page
5. Send the dispute directly to the creditor or lender
You can also generate a contentious complaint with the creditor (also called “supplier”) who invoked a late payment. Consumer.gov has a
excellent “direct” dispute page
, as well as a model letter of dispute, which facilitate the process.
6. Negotiate directly with the creditor or lender
If the complaint is dismissed, you can try to negotiate the late payment issue directly with your lender or creditor. This is by no means an easy process, but it is doable if you dig hard enough, go to the right decision maker in the business, and are ready to make a partial payment or (more efficiently) a payment. complete to clear the slate.
Also, offer to change your monthly payment method from paper checks or phone calls to automatic withdrawal. Lenders and creditors love automatic monthly payment withdrawals because they virtually guarantee the payment will be recorded and it doesn’t cost them a lot of money to process a payment this way (it’s a 100% digital process. ).
Just write another letter or better yet contact a customer service manager by phone or email or web engagement and have the company remove your late payment from your credit report in exchange for your automatic monthly payments. . You might be surprised at how effective this tactic is and it’s definitely worth a try.
When you do a deal, make sure you get it in writing and send it to each of the credit bureaus.
7. Request a “goodwill” adjustment
If you’ve only paid a late bill once or, at most, twice, a creditor can withdraw your late payment notice if you write a simple last to ask for forgiveness. It might seem awkward at first, but businesses like to hear from customers who made a mistake (but not a lot of mistakes) and work with them to fix their credit.
8. Work with a professional credit repair service
Yes, there are more than a few on-the-fly credit repair companies that over-promise and fail to deliver late payment removal services.
That said, there are companies – Credit Karma, CreditRepair.com, and Lexington Law Credit Repair come to mind – that have a good track record of resolving credit score and late payment disputes.
It may cost you several hundred dollars in the end to work with a professional credit repair service, but it’s a small price to pay to restore your good credit and possibly save thousands of dollars by having a good credit score. higher (and subsequently better loan and credit deals) down the road.
Go for it
Removing a late payment from your credit report is not easy, and it will take some legwork, diligence, and even creativity.
Follow the steps above, however, and you’ll dramatically improve your chances of removing that late payment from your credit report and set the stage for strong future personal financial health.