October 9, 2023

How to Remove Late Payments from Credit Report

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Late payments can set back your credit score more than 100 points. Don't let it worsen your credit. Learn how to remove it from your credit report.

Deadlines follow you in your finances. Your credit card balance has a due date. Mortgage payments alert you every month.

Be warned: One late payment can drop your credit score by over 100 points. Worse, it's one of the most difficult derogatory items to remove.

In this guide, learn proven ways to take late payments off your credit report, and some tips to avoid it from happening.

What Is A Late Payment?

A late payment is a negative item on your credit report. When you fail to pay on time, it will negatively impact your score. And, your lenders may charge you late fees on top of the monthly interest.

Your credit score drops when lenders report late payments to credit bureaus. This is why it's important to strictly monitor your payments and settle your dues on time.

But in reality, a lot of things may happen that can hinder you from paying on time. Read on and find the best ways to remove late payments from your reports.

Have you ever had a late payment on your credit report?

How To Remove Late Payments

Removing late payments may sound simple, but it's not easy. First, it doesn't guarantee an immediate increase in your score. Second, you need to create compelling cases to remove your late payment.

But here are ways to get late payments off your credit report.

Write A Goodwill Letter For Late Payment

Write a goodwill letter requesting your lender to remove late payments from your credit report. Your goal is to explain your situation and ask for consideration.

Goodwill letters are great examples of showing initiative. It won't hurt to send one to your lender. Some lenders honor it, grant goodwill adjustments, and remove your late payment out of courtesy.

Do note that your lenders are not required to honor your request. But it's a good way to show that you care about your credit and you are willing to build a better payment history.

When to write a goodwill letter:
A goodwill letter is ideal if you rarely make late payments. If you have a long, positive credit history with only one or two late payments, there's a better chance of a goodwill letter working. Your lender may overlook your late payments.

Goodwill letters for phone plan and other utilitites
Goodwill letters work best with small lenders and billers, such as your utility bills or phone bills. In general, big lenders like banks do report credit information to credit bureaus.

Send A Pay-For-Delete Letter To Lender

A pay-for-delete letter works like a goodwill letter. The difference is this: A pay-for-delete letter is a negotiation tool. You are negotiating with your lender to remove the late payment.

What usually happens is you will settle your late payments. In exchange, the lenders will remove the negative item from your report. But like goodwill letters, lenders are not obligated to honor pay-for-delete requests even if you pay your outstanding loans.

Most creditors, especially big institutions like your banks and credit unions, often don't accept pay-for-delete letters. Most major banks do report to credit bureaus but they are not legally required to do so.

When to use a pay-for-delete letter:
A pay-for-delete letter is one way to come to an agreement with your lender. If you send a pay-for-delete letter, make sure you can pay off what you owe. Lenders typically give only a couple of days for you to settle your loan if you agree to a pay-for-deletion.

Document all agreements in a pay-for-delete negotiation
Make sure to get everything in writing when you and your lender agree to the pay-for-delete letter. With proper documentation, you have the support and evidence you'll need to prove that the lender agreed to the arrangement.

Talk And Negotiate With Lender

Talk to your lender personally and explain your situation. Your lenders are still human. It doesn't hurt to have a conversation and try to settle your late payment—rather than let it reflect straight on your credit report.

Search for your lender's listed phone numbers and make a call. Talk professionally and calmly. Basically, what you write in goodwill or pay-for-delete letters, you are verbalizing in real-time.

Lenders don't need to agree to remove your late payment. But calling demonstrates initiative and effort from your end. And it shows you are willing to maintain a good relationship with them.

When to talk to your lenders:
A good conversation and agreement with your lender can minimize the effect of late payments. Some lenders are understanding, especially if you don't have any history of delinquent payments.

CARES Act accomodations for Fair Credit Reporting Act
"An 'accommodation' includes any payment assistance or relief granted to a consumer who is affected by the COVID-19 pandemic during the period from January 31, 2020, until 120 days after the termination of the COVID-19 national emergency declared by the President on March 13, 2020 under the National Emergencies Act. Such an accommodation includes, for example, agreements to defer one or more payments, make a partial payment, forbear any delinquent amounts, or modify a loan or contract." — Consumer Financial Protection Bureau

File A Dispute For Inaccurate Late Payment

Lenders can make mistakes. They can report the wrong dates. Or they may have recorded wrong details, leading to late payments or reported transactions that are not yours.

In these scenarios, it's best to file a dispute with your credit bureaus. You might be unaware of the errors reported. So you will probably only see them once you get your credit report or notice changes in your credit score.

As a consumer, you have the right to file a dispute with the three main credit bureaus. If you need to file a dispute, credit bureaus have dedicated web pages for dispute submissions.

When to file a dispute:
File a dispute if the late payment isn't yours OR if you actually paid on time. Make sure to deal with these errors urgently. Credit bureaus have allotted timelines to investigate your transactions.

According to the Fair Credit Reporting Act
"Consumer reporting agencies must correct or delete inaccurate, incomplete, or unverifiable information. Inaccurate, incomplete, or unverifiable information must be removed or corrected, usually within 30 days. However, a consumer reporting agency may continue to report information it has verified as accurate."

Hire A Credit Repair Company

Credit repair companies are businesses that help restore your credit. They have professionals, like counselors, lawyers, and certified credit specialists, who know the ins and outs of credit.

Credit repair professionals also know some aggressive methods to help you with late payments. However, you might spend big money on their services.

The benefit is this: You will have experienced people repairing your credit on your behalf. It's an advantage if you are not confident enough about the technicalities of credit repair and credit laws.

When to hire a credit repair company:
If you don't have the time or expertise to handle late payments directly with your lender, credit repair companies can do it for you. Find companies that specifically feature creditor interventions on top of credit bureau challenges.

Credit repair companies
Read about the most aggressive credit repair company that can help you with late payment records.

Wait For Late Payment To Disappear

When you're in a tough situation, it's hard to keep your payments on time. A missed payment becomes a late payment, even if you pay only one day past your due date. Sometimes, the worst happens, and you can't afford to pay off your debts for years. At that point, it's more practical to simply wait.

Late payments can remain for up to seven years on your credit report. If you have one that's a couple of years old, it may make more sense to wait until credit bureaus delete it from your report.

When to wait for late payments to disappear:
Do this as a last resort if you've exhausted everything. There's a saying, "time heals all wounds" and it also applies to your credit. If it's more economical for you to wait, then wait it out. Your late payments won't stay on your credit for eternity.

What is a missed payment?
A missed payment occurs when you don't pay a bill by the due date. In worst-case scenarios, several missed payments put your account into default. Meaning, you've missed several due dates and lenders have no choice but to sell your debt and put your balance in a collections account.

How Late Payments Affect Your Credit

Late payments can seriously impact your credit. Lenders usually report late payments when they are AT LEAST 30 days past due.[1]

How do late payments affect your credit?

  • Drop in credit score
    Payment history comprises 35% of your credit score.[2] The moment you pay past the due date and lenders report it, that affects your score instantly.

    Your credit score can also drop if you have a late payment that isn't yours. You should always monitor your credit because identity theft happens a lot. Don't wait for late payments that aren't yours to ruin your credit score.

  • Additional fees and charges
    You will incur penalties for your late payments. It's a consequence of not following due dates or not paying minimum amounts of the statement.

    Note that these additional fees are different from the monthly interest charges you need to pay.

  • Repossession of belongings
    When you apply for a loan and use collateral for security, your lender can claim them to settle your late payments.

    For example, homebuyers who can't keep up with mortgages can have their homes repossessed. Vehicles used as collateral can be repossessed if you end up with late payments.

How long do negative items stay on your credit report?[3]
Negative items can stay from 2 to 10 years. Hard inquiries can stay for 2 years, and a Chapter 7 Bankruptcy and tax lien can stay in your report for up to a decade.

Tips For Avoiding Late Payments

There are many ways to avoid late payments in your report. But the best way is to pay on time. Here are a few tips to stay on top of your monthly dues:

  • Set up auto-payments
    If you pay a lot of expenses monthly, chances are you are having a hard time managing them. One key trick is to set up as many auto-payments as possible.

    Link a common account where your lenders can charge your bills. Also, make it a habit to schedule auto-payments a few days before the due date to give each biller or lender processing time.

  • Put monthly alerts in your calendar
    If you don't want to use auto-payment features, set monthly reminders in your calendar. Calendar apps can display live notifications on your phone for your bills and payments.

    Keep these alerts on repeat every month so you don't need to set them manually. Best to set reminders of your monthly dues before the due date.

  • Prioritize your bills and payments
    One of the oldest tips in the book is to prioritize your bills by the due date. Try to allot a portion of your monthly budget to settle them. Your budget can tighten from monthly responsibilities and expenses.

    It's best if you work out a system and a schedule to keep all your payments on track.

Bottom Line

Late payments can tarnish your credit report for years. Ideally, your best action is to avoid it by settling dues on time! However, the reality is different and you may find it hard to pay on time.

Try getting in touch with your lender through phone calls and letters, or hire professionals to help you. In the worst-case scenario, wait for your late payments to disappear from your credit reports over the years.

References

Write to Alex Mambaje at feedback@creditdonkey.com. Follow us on Twitter and Facebook for our latest posts.

Note: This website is made possible through financial relationships with some of the products and services mentioned on this site. We may receive compensation if you shop through links in our content. You do not have to use our links, but you help support CreditDonkey if you do.


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