Late payments can be reported on your credit report for all types of credit accounts. The most popular being Credit Cards, Personal & Auto Loans, Mortgages, and Student Loans.
In this guide, we are going to discuss the options available to you for removing late payments from your credit report.
Let’s get started!
There will come a time when you want to upgrade to a bigger home. Or refinance it and get a better rate, or even pull out some cash for a kitchen remodel.
You might even want to buy a new car or an investment property to start collecting rental income.
Sometimes you don’t want to buy anything at all; you just need the security of having some available credit to draw from in case of an emergency.
You’ll fill out an application for that new loan and then bam! The bank hits you with some bad news; they cannot give you the loan you wanted. Left in disbelief, you think to yourself “What is the problem? My credit is perfect, you need to rerun my application, or I’m going to a different bank!”
Upon further research and a quick look at your credit report, you realize something appalling has happened. You notice that there is a late mortgage payment reporting from 6 months ago. You might even notice some late payments for a credit card, personal loan, student loan, or an auto loan!
For someone who never checks their credit or does not understand how the banks report late payments. Having one, two, or even three late payments from the lender servicing your credit account in the last 24 months will kill your credit score.
Along with the dream of being approved for a new loan to purchase your new home or car. Worse, you could be turned down for something serious like a student loan so you can attend college.
Let’s explore some creative options to see if we can get that dream alive again. In the following sections, we’re going to review some options for removing late payments from your credit report.
Before You Start, You Get Organized
Figure out why this late payment happened by requesting a free credit report from the lender who turned you down. I also recommend you get your own copy of your credit report.
The good news is you can easily get your own from all three credit bureaus with a credit score. Head over to ID Cyber Center and check out their “Get Protected” service plans. I highly recommend you go with the Premier Pro plan for the best value.
Once you get a copy of your credit report (with credit score) for each bureau, you’ll need to review it to find any errors or bad marks. If you need some help, find a friend or family member who can help you out.
Next, you’ll need to look back in any financial records you have that can prove the payment was made (late or on time). For example, look for cleared checks and bill payments on your checking account statement.
You want to prove one of two things:
- You made the payment on time, but it was reported as a late payment and is clearly an error by the banks or credit bureaus.
- Your intentions were good, but the payment was truly late. Maybe you had a bad month, forgot about it, or had a financial hardship.
Whatever the reason is, there are some options for you, let’s review the first one below.
Quick Note: It’s super important to know your rights and be educated as much as possible about credit repair. I highly recommend the following Credit Repair Book by Nolo Press. It’s helped me a lot over the years and you’ll find the information quite useful!
Quick Disclaimer About Doing This Yourself
Before you start any efforts to remove late payments you need to decide first whether or not you want to do this yourself or hire a professional. If you are unsuccessful in doing it on your own, a professional is going to have a tougher time stating a case on your behalf because the lender or credit bureaus already have a record of your failed attempts. If you’re not 100% sure about doing this on your own, I would consult with a reputable credit repair company first. Otherwise, it may cost you even more if they have to undo any damage from the failed attempts. If you decide that you want to do everything yourself and understand the risks you can skip option #1 and go straight to option #2.
Option #1: Contact A Credit Repair Professional
Finding a professional can be quite an effort. Especially when sorting through all the Google Paid ads for Credit Repair Services, etc. When working with a business providing Credit Repair Services, you should never have to pay upfront for any services. After an evaluation has been done and results are made to actually clean up your credit, then it’s OK to pay.
Upon doing some research on the web, I found a Credit Repair company that does not expect you to pay upfront.
Check out them out at LateRemoval.com
Their website says they specialize in the following:
- Calling the legal departments of the banks on your behalf.
- Having a professional attorney do all of the back and forth phone calls, and paperwork.
- Can customize a package working with the following credit accounts: Mortgage or Home Equity Lines of Credit, Credit Cards, Student Loans, Personal Loans, and Car (auto) Loans.
Below in Options 2 through 5, I walk you through how to do everything yourself.
Option #2: You Contact The Lender via The Phone (use caution)
If you decide to contact the lender who is reporting the late payment via the phone use caution. You can read the below Quick Tip in red for more information.
Quick Tip: Use caution when calling in, the call could be recorded. Make sure you don’t say something that could conflict with the information you’ll need to prove in writing. Especially any information documented in a letter you might have to send in later. If you are not 100% comfortable with speaking with the lender on the phone it’s OK, just skip this option and proceed to option number 3.
You can get the phone number to call the lender from their website or your account statement. When you call to speak to the representative, be prepared to state your position. You want to remain calm, professional, and firm.
If the late payment is due to an error by the bank, it will be super easy to get it removed. Show the proof of payment clearing your account on time, and you’ll be done. You won’t have to provide much more of an explanation than that.
They may request a hard copy of your proof, and that is fine, just follow their directions to send it in. It will most likely be faxed, e-mailed or sent via snail mail.
If the late payment was not a bank error, then your best course of action is to show your appreciation, take responsibility for it, and briefly explain what happened.
If you’re finding it hard to build rapport or get the customer service agent to remove it, you can escalate to a supervisor. But at this point, it’s probably best to send the late removal request in via writing (going to option #3).
Option #3: Sending A Goodwill Letter
You’re going to carefully craft a letter which is known in the banker’s world as a “Goodwill Adjustment Letter.” The intent of this letter is specifically for removing late payments from your account. Then, the lender will report the removal to the credit bureaus which will clear it from your credit record.
With the credit account in good standing, your credit score goes up again.
The beautiful thing about writing to your lender is you can control what you’re going to say. You can take your time presenting a statement of facts, which is a significant advantage over giving them a phone call.
If you need assistance, you can have a friend help you create the letter. If your friend is not qualified to help you, then hire a professional to assist you.
A well-written letter will be taken seriously by your lender. Follow the below tips for writing an effective letter.
A strong goodwill letter will have the following:
- Asks the creditor to empathize with you.
- Is written in a professional style that is pleasant and courteous.
- It shows that you take responsibility for your missed payments.
- It demonstrates that you’ll stay current on your bills in the future.
- It helps if you can point to a particular circumstance (for example, you lost your job but have since found a new one) that caused you to slip, and you can show a recent track record of on-time payments.
- Most of all, Keep it short and sweet!
Be sure to include your account and phone number, name, address, e-mail, and any other documents or bank statements required to prove your case.
Send it certified mail too that will make it look important.
After you send the letter in, expect the bank to send you back a letter of response. And remember, once everything is in writing, it stays that way.
Here’s what you can expect to happen!
Just like above on the phone, if it’s clear without a doubt a bank error, they’ll have no problem removing it.
If the late payment was because you made it late, they will still most likely remove it. Then report it back to the bureaus as being removed.
If you get a written response back, that says “sorry we cannot remove it!”
You’ll need to get a bit more crafty in your writing and respond to any additional information they require.
Depending on the lender, this will be easier or harder. If you don’t have a good standing with the bank, you may not get anywhere, even if you escalate it.
Depending on your time and resources you may not get anywhere at all, which then you’ll need to dispute it directly with the credit bureaus. We’ll discuss that in the next section.
Option #4: Disputing With The Credit Bureaus Directly
You can dispute your late payment with the credit bureau’s directly with a “Payment by deletion” letter. It will force them to make an inquiry to the lender reporting the late payment. You can use the template in this link as an example, and you have to send a separate letter to each bureau.
Disputing with the credit bureaus can be a bit tricky. They’re so busy sorting our real errors from technical ones, that there’s a good chance they’ll just fix your credit report based on lack of evidence from the lender.
If you fail with the first attempt, you can keep disputing the late payments. If the bank does not respond to the bureau within thirty days and you are persistent enough, it will fall off. Because the bureaus will conclude that you must be credible, and the lender is not.
After that, if you’re still in a bind, it’s time to call a professional.
Option #5: Adding A Note To Your Credit Report
The Fair Credit Reporting Act makes it possible for you to explain your personal financial debacle or issues. You can add up to a 100-word note on all of your credit reports. It’s your legal right!
However, you have to contact each of the three credit bureaus separately.
Use your judgment to make sure the note does not do more harm than good. The only person who will ever read this would be an underwriter for a loan approval. So if them reading it would help the approval of a loan, it’s worth a try.
Giving up to soon will cost you money in lost opportunity, so be sure to explore all your options.
What matters most.
You have good intentions and always try to pay your accounts on time. But hey, life happens, and sometimes you get a bad mark on your credit. You should not be punished for seven years while those late payments wait to fall off.
Staying knowledgeable and monitoring your credit often can protect you and your dream of purchasing big ticket items responsibly.
I hope you enjoyed reading this guide, and I’m going to have some other useful guides for credit repair in the near future.