Many people are struggling with their finances and are not able to afford professional credit repair or legal services. This article is written with them in mind and caters to their need for immediate credit restoration. Through this article, I have tried to provide them with an actionable 3-step plan to remove late payments from their credit reports. The same strategy can be used for payments that are older than 60, 90, and 180 days.
What is most important to know is Recent late payments never come off with credit bureau disputes or sample goodwill letters. By recent, I am referring to payments ranging from today to 4 years ago.
Over the last 15 years, I have worked with different clients and helped people with their credit position improvement. Handling diverse scenarios has helped me in crafting and perfecting this strategy of mine which would render the best results for all individuals. There is no denying the anxiety and panic that a poor credit score causes for all individuals. They are always looking for ways to get negative items removed from their credit reports. They approach creditors who make them run around in circles. Even professional credit repair companies provide no respite. For some people, paying the exorbitantly high credit repair company’s fees becomes a big task, and even after all this, they see no improvement in their credit position.
Thus, for all folks out there who are struggling to improve their credit profile, I have some heart-warming news for you. This strategy, that I am going to suggest, will not only help you improve your credit score but will give you a sustainable advantage.
Table of contents
But, before diving deep into the strategy, let me clear up some misconceptions about late payments.
How does a 30, 60, or 90 day late pay affect the credit score?
If you have got a good credit score, a new delinquent payment will affect you far more negatively than someone with a poor score. For a credit score of more than 680, a new late payment is going to affect you badly. A 30-day late payment may drop the credit score by 80 points, whereas a 60 to 90-day late payment will drop the Fico score by 80 to 120 points!
Once you make the late payment, your score will only increase by 1-2 points per month. There will be a slight increase once you bring a delinquent account to current, but after that, it will be an extremely slow recovery.
How long does a skipped payment stay on your credit for ?
If you miss a payment, the late payment will become part of your credit payment history and stay on your credit report for 7 years.
Even paying off or closing the late payment account will not remove the late payment any sooner. The ‘pay for delete’ option works exclusively for collection accounts.
NEVER dispute a recent late payments with the credit bureaus
Even though you might hear many credit repair companies claiming that disputing recent late payments will boost the credit score greatly, you should never try disputing a recent late payment with the credit bureaus.
Today, the credit bureaus use modern technology. They have switched from manual systems to automatic dispute verifications wherein they correspond to the creditor via their data exchange interface, E-Oscar. Hence unlike the older days, no phone calls or hand-written communication (letters or documents) will be exchanged between the credit bureaus and creditors. The electronic interface verifies millions of accounts that are disputed every month by consumers in a matter of minutes, by cross-referencing databases of the bureaus and creditors. However, a major drawback of this interface is that it is not effective for recent late payments or late payments on open accounts.
Can a late payment be removed if caused by Covid19 pandemic & shelter in place?
If individuals miss out on payments due to a global phenomenon, such as the Coronavirus pandemic, they will get some relaxation from the creditors. For instance, if people miss their payment after March 2020 due to the economic fallout from the coronavirus, lenders will make exceptions for them. The same is true for individuals suffering from health complications.
To avail of this benefit, the individuals should call the creditor and see if they will be able to issue a courtesy removal of the late payment. Creditors may ask for proof of loss of income or health complications.
Why creditors DO NOT want to help you fix your payment history?
Gone are the days when goodwill letters were helpful to achieve any tangible results while dealing with creditors. With frequent advice of disputing late payments coming our way, almost all individuals have tried reaching out to creditors in some way or the other. Many people have wasted their time sending courtesy removal requests to creditors, while others have wasted money with incompetent credit repair companies. The bottom line remains that Goodwill letters do not work today. On the contrary, they make your chances of removing a late payment from your credit report even worse.
Regarding this, Bank of America commented, “We are required to report complete and accurate information, and thus, we are not in a position to honor requests for goodwill adjustments.”
Why creditors DO NOT want to help you fix your payment history?
All you need to do here is to find out all the necessary information surrounding the late payment. Start with finding out when the payment was due and when was it made.
For example, the creditor might say you had a payment due of $20, for a $500 balance, that was due on June 10th, and the payment was not received until July 15th. Thus, you are late by 35 days in making the payment, and they have put you in the 30-day late payment category.
To begin with the dispute, you need to have a strong argument to back your case. Thus, look for any shortfalls on the part of the creditor. You can check for the following.
- You missed a payment that was for an annual fee or membership fee from the creditor
- The creditor sent a mail to your home, which they tell you were returned as undeliverable
- The payment took a few additional days to process (2-3 days). Thus, you went over the 30-day mark
- They were mailing statements to the wrong address
- They were sending statements to an old address, even though you had informed them about your new one
- You submitted the payment on time, but it bounced because they took down your incorrect bank account number to process the payment
- You paid off the amount, but it incurred interest charges processing
- The minimum payment amount you had to pay had increased but the auto-pay feature did not make this adjustment
- They misspelled your email where online statements were to be sent.
- You thought you had closed the account, but it incurred a re-occurring charge that was not canceled.
You can use any kind of scenario, where there is a case that the late payment incurred was in part due to the creditor’s negligence.
Ensure that you do not dispute this issue on the phone unless you find negligence as described above on the creditors part. In case you do find a mistake, then you can ask the creditor for a courtesy removal of the late payment from your credit report. If they agree to remove the late payment, ask them to send you a letter confirming the same. You should clarify that you want the late payment removed from the credit report and not just waiving the late payment fee.
Usually, creditors, no matter whether big or small, agree to remove the late payment from credit reports if there is a fault on their part. The individual should gather all the necessary proof and present his case smartly.
Step 1A: Call Creditor- getting key dates and facts
All you do here is find out all the necessary information surrounding the late payment. Start with findings out when the payment was due and when was it made?
Eg. The may say, you had a payment due of $15, for a $300 balance, that was due on June 1st , and the payment was not received until July 8th. Thereby making you 38 days late. So they can legally report you as 30 days late.
First you want to start with seeing if there is any blame you can pin on the creditor. So find out if the lates were due to any of the following issues:
1. You missed a payment that was due to for an annual fee or membership fee from the creditor.
2. The creditor sent mail to your home, which they tell you was actually returned as undeliverable
3. The payment took 2-3 days to process, due to this you went over the 30 day mark.
4. They were mailing statements to a misspelt address for you or had an apartment number missing
5. They were sending statements to an old address, even though you notified them of your new one.
6. You submitted the payment on time, but it bounced because they took down your incorrect bank account#to process a payment that bounced.
7. You paid the account off, but it incurred interest charges that were applied as the payment was processing.
8. The minimum payment had increased but the auto pay did not make this adjustment.
9. They misspelt your email where online statements were to be sent.
10. You thought you had closed the account, but it incurred a re-occurring charge that was not cancelled.
11. Missed payment due to Corona virus shut down or related health complications.
You can use any kind of scenario, where there is a case that the late payment incurred was in part due to the creditors own negligence.
However, here’s a big mistake…
Telling the bank you did not receive the statement, if they had your correct address, as they will then conduct their own investigation and if the statement was not returned to them as undeliverable, they will deem your dispute frivolous.
Do NOT dispute this issue on the phone unless you find some kind of negligence as described above on the creditors part.
In the event you do find a mistake, then ask for a courtesy removal of the late payment.
If they agree to remove the late, ask them to send you a letter stating they are removing the late payment from the credit report.
Clarify that you want the late payment removed from the credit report and that you are not referring to the late payment penalty fee that may have incurred.
Normally if the creditor agrees to remove the late payment they will themselves update the account history on the credit report.
The likes of Bank of America, Chase and Wells Fargo often update accounts within a couple of weeks.
Additionally, I’ve found that credit cards like Amazon/Synchrony Bank, Macy’s Credit, Gap Store Cards, Nordstroms are more likely to bow to courtesy request on the phone if you can argue for part negligence on the creditor’s part.
On the contrary, big banks and credit card companies, like Capital One, US Bank, Chase, Barclays, Citi are not as easily swayed to remove a late payment. Either way, if you’re not able to find creditor mistakes, do not get disheartened and move on to the next step.
Step 1B: Identity any extraneous circumstances or errors that led to late payments
If you can prove that a third-party mistake or some unavoidable circumstances led to the late payment, and the late payment was not due to your financial inability, then you have good chances of getting the late payment removed.
However, note that creditors will never remove a late payment due to financial hardship or job loss. But if you can show documented proof of what happened, along with a copy of your bank statement showing a healthy balance of a few thousand dollars, then creditors may agree to remove late payments. They will most likely agree under the following circumstances:
- The statements were being sent to your home address while you were traveling or on vacation
- You were hospitalized or suffering from emotional trauma
- There was an emergency (death, accident) in the family
- Your accountant forgot to make the payment
- Your bank faced some issues which resulted in your late payment
- Your email where you get e-statements was hacked
- Your paper statements and mail were stolen
- You had submitted a double payment the last month and assumed it would cover the next month
- The town you reside in was subjected to a natural disaster
- Creditors online system had some technical glitches
Now if you can prove a scenario like this then you will need to ask for the address, fax, or email for the creditor’s “Credit Bureau Department,” to whom you can fax this information for review. They will review the information sent by you and contact you within 2-4 weeks with their decision.
In case you try all this and land up with no luck with the creditors, you can follow the next step of engaging with the creditor bureaus.
Step 2- Engage the Creditor’s Executive Resolutions Dept or Credit Bureau Department:
If your first correspondence or call to the credit bureau has not worked, then that means you are in for a long haul. The next step here would be to move up the hierarchy. You can engage the Executive Resolutions Department. If you are not allowed to speak to the Executive Resolutions Department, you can mail your complaint to their corporate office by certified mail, addressing the CEO. This action normally takes 30 odd days or so to get a response.
You can also lodge the Consumer Financial Protection Bureau Complaint. At this stage, you can get the different regulatory agencies involved like the Consumer Financial Protection Bureau (CFPB), and complain to the creditor. If it’s a credit union you’re dealing with then you will need to file a complaint with the National Credit Union Association.
However, if the late payment did not occur due to the creditor’s negligence, then the complaint cannot be made under the premise that the creditor acted illegally and violated your rights under the FCRA. You need to choose an alternate valid reason to prove that the creditor is acting unreasonably. If the CFPB finds your claim strong enough, they might send it to the creditor.
The creditors usually respond within 15 days and if the creditor does not respond favorably, the CFPB allows you to submit your feedback.
Finally, if the creditor responds and states they have agreed to remove the late payment, you should wait for 30 days to confirm the same.
However, if the results are still negative and the creditor pays no heed to your complaints, you can go for the third step. As per my experience, this is a strong but sure-shot strategy for getting the late payments removed.
Step 3 - Filing a small claims lawsuit against the creditor
If all the above steps fail, you can file a small claims suit against the creditor. For this an extensive research of one’s state’s civil code is needed, to see what violations about credit reporting, breach of contract, unfair business practices, and negligence were committed. Also, for small claims, the court requires individuals to show proof of monetary damages like some documentation showing that the consumer was turned down for credit due to the specific late payment.
However, simply filing a lawsuit will not make the creditor buckle. The case must be strong and well documented. Even if the creditor does not show up in court, the judge will still look at the merits of the case and rule accordingly.
The Final Step: Take Action to repair your credit
Thus, individuals should follow all the above steps meticulously for addressing their grievances regarding late payments. While professional help is always better to deal with credit repair issues, the above guide if followed carefully, is also enough to achieve the desired results.