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How To Remove Late Payments Items From Your Credit Report

Written by Robert Ferry on June 1, 2020
How To Remove Late Payments Items From Your Credit Report

Defaulted payments can be detrimental to your credit score and make it hard for you to get loans and credit cards.

Late payments can stay in your credit report for as long as seven years, which is a significant amount of time – long enough to bar you from accessing loans with reasonable interest rates.  

If your report shows some late payment, the effects it can cause – both immediate and long-term – could tank your credit score.

Beyond the apparent need to make timely payments, deleting delinquencies could be a viable option, especially if the default was unintended.

In this piece, we're going to explain the effects that late payments have on your credit score, how long they can stick to your report, and how you can drop them.

Why Delinquencies show up in Credit Reports

Two significant scenarios contribute to this occurrence: you either can have erred or not.

When you're not at fault, you may delete this late payment by filing a dispute with the respective bureaus. The information centres dislike inaccurate information on their databases, so if your claim can be substantiated, they'll take action to fix the errors.

In the second scenario, you may still be able to remove late payments from credit report by talking nicely to the bureaus, elaborating more of our situation, and resolving to be more accountable in the future. If you've had an incredible trend of payment with the lender, it would be a perk on your end though there's no guarantee that it would be fruitful.

Regardless of whether or not the late payment is your error, it would help if you always tried to remove it.

How Long Delinquencies Stay On Your Credit Report

Defaulted payments stick to your report for seven years. Beyond the apparent challenge when getting new loans and credit cards, it will also affect the interest rates you get.

How to Remove Late Payments from Credit Report

If your late payment is a mistake, removing the late payment may not be as daunting as the second scenario.

The Federal Trade Commission (FTC) claimed that 20% of people on credit have issues on their credit report – and often, you cannot entirely overrule the possibility of having such an error on your statement.

This situation is enough justification for you to check your credit reports frequently.

Federal law gives the legal provision to get a free copy of your report annually, and since information varies across the three bureaus – Experian, TransUnion, and Equifax – you'll typically see under the "accounts" section in your report from each of the three bureaus.

Your loan issuers report the type of account – like a mortgage or credit card loan – as well as the date you borrowed, the amount you owe, repayment history, and loan amount.

Before filing for removal of the negative items, look for inaccurate information.

Below are some inaccuracies to check.

A Defaulted Payment That Is More Than Seven Years' Old 

Defaulted payments should automatically drop off after seven years. While you might see several negative items for each billing cycle – in the order of 30, 60, 90, and 120 days – the seven-year timeline begins with the 30-day defaulted payment.

Mistaken Reports of Late Payments

Sometimes you make on-time payments, but the system treats you as a defaulter.

If you clear your bills on time, yet one of your accounts displays a defaulted payment, make sure you check the billing statement against your bank records.

You can retrieve this information either a hard copy or get an e-Statement from your creditor.

Should it turn out that you paid your bill on time, your creditor will be obligated to eliminate the negative items from your report legally.

How to request Late Information Removed from Your Report

If you spot a discrepancy and you're sure you can file a good case for removal, make a formal request to your respective credit bureau in question.

You should check and compare your credit report to the three bureaus as information from one may show a discrepancy from the other.

The three credit bureaus give a provision for making such a request online, by email or phone.

However, using online channels for raising a dispute isn't recommended since most questions are "pre-populated," and the bureau may not be conclusive. Instead, use certified emails to get a better overview of your accounts.

Below are some of the ways to check your credit report for free, and while the amount of information displayed in each method varies, checking your reports has no impact on your credit score.

  • Fetch your credit reports annually for free
  • Utilize credit monitoring services like CreditKarma and Chase Credit Journey to show some information on your credit report.
  • Based on the laws on your state, you may be eligible for more free credit reports.

Once you've identified the credit reports with errors, you can proceed to the next step.

Negotiate Directly to The Lender

Filing a dispute with the lender (the "furnisher") who reported the late payment is another option. If your argument ends up rejected, you can directly negotiate the issue with your creditor, which is a daunting, but possible venture if you dig hard to get the right decision-maker.

In some scenarios, the loan issuer may need some proof that you cleared payment on time. A letter containing the bank statement or showing timely payment is sufficient to make the lender rectify the mistake.

If the lender verifies that the defaulted payment was an error, get a written confirmation that the lender made a mistake and that it wasn't your fault.

It is wise to send a dispute to the bureaus and confirm that the lender removes the defaulted payment from your report and refunds any money you might have incurred for late payments.

While the lender might agree that it was a mistake and resolves to rectify the same, it doesn't necessarily mean that the defaulted payment will disappear from your report. Make sure to check it after at least a month or more since different lenders take different periods to rectify the errors.

Besides negotiating, commit to switching your monthly payment method from checks or phone calls to automatic account debiting. Creditors prefer the automated digital process since it's less tedious, and they won't have to spend so much to process the payment.

In exchange for making automatic payments, write another letter or get a customer service manager on phone or email to remove the late payment from your credit report. You may be shocked by how easy this might work, and it's absolutely a worth try for you to make.

When negotiating, make sure to put it in writing and send it along with the credit report to the agencies.

Dispute with The Credit Bureaus 

There are several ways you can reach the credit bureaus and dispute a late payment, and whichever way you choose, none of it will impact your credit score.

When you file a complaint about a negative item on your credit report, the bureau investigates within 30 to 45 days. Then, they provide you with an update of the investigation results.

In the course of the investigation, the bureau will review your dispute, and if they verify that the report is legitimate, it will undoubtedly stay in your report.

Many people try to make incorrect such claims and end up damaging their relationship with lenders and credit card issuers. So it would be best if you always had justifiable arguments and always back them up with updated reports.

Even though credit bureaus have online pre-populated provisions for filing disputes, which may not allow you to conclusively give your side of the story, use certified mail to explain your side of the story in detail. Include all information – SSN, ID number, bank or insurance statement – and remember to send copies (not original documents) since you won't get them back. Also, pay keen attention to documentation since providing a long letter won't be as useful as sufficient documentation.

Issuing A Complaint to The CFPB

The consumer financial protection bureau gives a provision for settling disputes if you're not satisfied with information from the three credit bureaus. While the CFCB provides resources for clients who can't fix a late payment, it has a mammoth of processes and federal government procedures that may take a while.

Request A "Goodwill" Adjustment 

If you truly made a late payment, you can still have it removed from your credit report. Although the odds are quite low, it's always worth to give it a try and avoid the potential long-term impacts on your credit report.

In this case, you'll be contacting the lender directly, instead of the credit bureaus. Typically, this is known as a "goodwill adjustment," where you reach the lender and plead your case by asking them to forgive you.

The chances of the lender accepting your request are quite low, but if you have an incredible payment history, they might consider your case. Additionally, if you experienced a technical glitch or significant life event – like death – which hindered you from paying on time, your creditor may be empathetic.

If you've been a dodgy customer with a history of defaulted payments, this might not work, but you can still try. The most significant considerations to make when going through this process are negotiation and asking nicely.

Why A "Goodwill Adjustment" Might Fail to Work

All credit issues are performed under legal jurisdictions, and sometimes the lender might object, terming it as "illegal."

However, it's not illegal for the creditor to alter anything since it's entirely voluntary. However, if the lender was caught deleting items on credit reports, their license might be revoked by the bureaus since credit reporting is a big way to make people clear their debts on time.

Essentially, deleting late payments on credit reports is undoubtedly a legal undertaking, but if the lender thinks they'll get in trouble with the bureaus, they might not remove the debt.

What If You Don't Succeed?

Defaulted payments can stay in your credit reports for more than seven years, making it hard for you to get good loans and equitable interests.

If your attempt to drop the late payments is unsuccessful, you can either rebuild your credit or borrow with a bad score.

The most significant consideration is to avoid late payments – make all payments on time or before the due date. To prevent any issues, you can sign up for electronic payments. If you have to borrow, do so only when necessary and stay under 30% utilization to avoid problems with your credit score.

Taking a new instalment loan and clearing the payments on time might also help, but borrow only with the right strategy.

While having poor credit doesn't necessarily mean you cannot borrow, the strategy is to avoid predatory lenders who have high interests and expensive processing fees.

If the credit company demands that you have a guarantor, the cosigner might help you acquire some type of loan by promising to take over the payment should you default. This approach might be risky since their score could plummet if you default, but the perk of this approach is that you'll have the standard interest rates and reasonable fees.

Conclusion

Late payments matter when it comes to credit score evaluation. Even if you have a perfect credit report, one defaulted debt can damage it and cause long-term consequences.

Two or three late payments could damage your score, but the damage could be reversed if you resolve to avoid making a habit out of it.

If the delinquency is an error, you can have it lifted, and it probably wouldn't damage your credit score. However, if you truly made a late payment, you can use a goodwill adjustment to explain yourself.

Overall, remember to keep in mind that credit bureaus dislike inaccurate reports in their databases. If you bring an error to their table, they'll try to verify it diligently and stay within the jurisdictions of the law.

Article written by Robert Ferry

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