How to remove late payments from my credit report
While there are many factors that affect your credit report, nothing has a bigger impact than your payment history. In fact, your history of on-time and late payments makes up 35 percent of what bureaus take into consideration when calculating your credit score.
Generally speaking, a late payment (also known as a delinquency) can lower your credit score by 100 points or more. This is especially true if you have a higher credit score (600+), as it will cause a bigger drop than if you had a lower score.
Proving you can make payments on time is what will get you better loan interest rates, and a better credit score that will enable you to take out larger loans for your dream house or car. Getting to that excellent credit score takes time and commitment, and it can be knocked down with one simple mistake.
This means that paying close attention to when each payment is due is important for maintaining the good credit that took you so many years to build. Read on to learn more about the effect late payments have on your credit, as well as our tips on fixing your credit if you do miss a payment.
How to remove late credit card payments from your report
Before contacting your lender about removing negative items from your report, you need to determine if the mark was listed by mistake or was an error on your part. Here is how you can get inaccurate late payments removed, whether there was an error on their end or yours.
1. Analyze your late payments
In addition to keeping track of your daily charges and overall balance, you should analyze your credit history at least once a year. Each of the credit reporting agencies (Equifax®, TransUnion® and Experian®) allows one free credit report copy every year. By requesting your free report from one of the credit bureaus every few months, you can ensure your credit is in good standing throughout the entire year without spending a penny.
When analyzing your report, any late payment you come across should be under seven years old. Although it’s rare, sometimes older delinquencies can remain on your report after their expiration period. If you do find an older late payment on your report, make sure to call the bureau and file a claim to get it removed.
2. Dispute incorrect claims
If you find a late payment within the seven-year time frame that you don’t recognize, there’s a chance your lender made a mistake when reporting it. You can dispute this claim directly with the credit bureau, with your credit card company or even with your collection agency. After filing a claim, the company has 30 days to investigate before sending through their ruling.
To help make your case, providing proof that you made the payment on time is important. If you can, send through an account statement or payment confirmation on the date you made the payment to help speed the process along.
If you’re trying to improve your credit score by removing late payments that were reported correctly, you have a few ways to approach the situation. However, it’s important to note that successfully removing late payments that weren’t reported in error is very rare.
3. Write a goodwill letter
A goodwill letter is a formal explanation of why a late payment was made that you can send to creditors in hopes of getting your report wiped clean. While not always successful, a goodwill letter is often recommended for those who have fallen on economic hardship due to circumstances out of their control. Examples can include health issues, sudden loss of employment or even natural disasters.
When writing a goodwill letter, it’s important to be respectful, honest and sincere. Discuss your credit history (if in good standing) and the actions you plan to take to ensure a late payment doesn’t happen again. If you don’t hear anything back after several months, consider calling, emailing or sending updates of your current on-time payments to help change their minds.
4. Be wary of pay-for-delete services
Pay-for-delete services, while sometimes thought to be a way to improve your score, are a little trickier to tackle. Often boasted by collection agencies, a pay-for-delete agreement helps remove debt account balances from your credit score via agreed-upon payments.
This option isn’t often recommended for a few reasons. First, even paid collection accounts still show up on your credit score. Second, pay-for-delete services also don’t remove late payments or automatically boost your score, making them not worth the hassle unless you’re in a significant amount of debt.
5. Negotiate with lenders
One of the final options you have for updating your credit report is negotiating directly with your lender. While not always successful, offering to pay your debt up front in a lump sum or setting up automatic payments to prevent this from happening again may be enough to convince your lender to drop the late payment from your report.
This method is especially successful for those who have a long track record of making on-time payments, or those who had a recent financial setback such as a job loss.
How late does a payment have to be to affect your credit?
Legally, late payments cannot be reported to the credit bureau until they’re 30 days past due, meaning you have a month to make that payment without lowering your credit score. If you can’t pay within that 30 days, try to catch up as soon as possible—the longer you wait, the more a delinquent account hurts your score.
That doesn’t mean there won’t be other consequences for paying late, even if you do make your payment within the grace period. While this won’t affect your credit score or report, late fees from your credit card company often begin immediately after the due date and can continue to rise until you make your payment.
If you’ve established a history of on-time payments, it’s worth calling your credit card company to try and talk your way out of those extra fees. Many credit card companies will waive the first late payment fee, so check and see if that’s included in the terms of your credit card before giving them a call.
How long does a late payment stay on your credit report?
Late payments remain on your credit report for seven years. This applies to each individual late payment, no matter how many of them you make and how often they occur. The seven-year period doesn’t start over at any point, so you don’t have to worry about other accidental late payments adding any time to previous late payments.
As time progresses, the impact of this late payment on your score will decrease. After the seven-year mark, the late payment is no longer shown when creditors or loan agencies perform a credit check.
This allows you to move forward with a clean bill of credit health and start working your way to an excellent credit score once again. If you’re looking to get negative marks taken off before the seven-year time frame, we’ve already mentioned a few options available to make that happen.
How to recover your score after late payments
If none of the methods above worked to help you remove late payments, the best thing you can do to help rebuild your credit is to set yourself up for success moving forward. As your late payments get closer to that seven-year mark, you’ll often find that it affects your overall score less. Here’s how you can help increase your score.
Make it a one-time occurrence
Working to make sure your late payment is a one-time occurrence is imperative to showing lenders it was an honest mistake. This allows for more trust the next time you apply for a loan, a mortgage or even another credit card.
Setting up automatic payments from your bank account is recommended for those who often forget to pay on time, taking the guesswork out of bill due dates. However, if your bill varies widely in amount from month to month, only set up automatic payments if you’re sure you can cover each month’s payment.
Keep card balances low
Using your credit card frequently is important to show creditors you’re a trustworthy spender. However, if your account balance gets too high, it can have a negative effect on your score and credit utilization ratio.
It’s recommended to never leave more than 30 percent of your total credit allowance as a balance on any given card—this helps keep your credit in good standing and prevents a lot of debt. This recommendation holds true even if you’re making the minimum payment required each month.
Get your status to “current” quickly
If you missed a payment on a loan, the status of that account will be available on your credit report. Getting that status updated to “current,” or paid in full, as quickly as you can is important to boost your score and avoid any long-term damage.
How to avoid late payments going forward
After you’ve recovered from a late payment, you’re likely being extra cautious about making on-time payments from here on out. Here are some additional tips on how to set yourself up for success and avoid late payments going forward:
- Reduce the amount of bills paid each month: See if it would make sense to look into debt consolidation or a balance transfer credit card. These consolidate your debts into fewer monthly payments, so you only have to worry about one or two payments each month as opposed to more.
- Set up automatic payments: If possible, see how to set up automatic payments for your various payments so all you have to worry about is having the money to cover the payment. If the amount due varies each month, set up payments for the minimum amount due and check to see how much more you owe.
- Remind yourself: If you’ve been late on payments for no reason other than just plain forgetfulness, set up regular reminders in the form of text alerts, calendar nudges, email reminders and any other method you may need to remember to pay your bill.
- Select due dates: Many credit card issuers allow you to choose the best due date for making payments that work around your pay schedule. If your payments are spaced out on random days, choose easy-to-remember due dates (such as the day after payday) so you never forget when a bill is due.
A missed payment, while unfortunate, isn’t the end of the world when it comes to your credit score and overall financial goals. If you can’t get these mistakes removed by trying the above tips, the best thing you can do is to keep moving forward and working to improve your credit education. By staying on top of your yearly credit report and upcoming payments, you can take control of your financial future and prevent a late payment from happening again.
from a Credit Expert