How To Remove Late Payments From Credit Report?

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How To Remove Late Payments From Credit Report?

Credit score has become a lifeline in this fast-paced and capitalized world. Your credit score determines whether you can acquire quick funds to travel, study, buy a car, or even manage personal expenses by applying for loans. Several factors can affect your credit score negatively, and the most crucial among them is late payments.

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However, at times, due to unavoidable circumstances, you can miss your payments, which can lower your credit score, spoiling all of your previous efforts. Naturally, you may find it unjust and want to find ways to help you maintain a good credit score even after a few late payments. 

Why Are Late Payments Bad?

Granted, everyone wants to pay the bills on time. However, it may not always be possible because of different issues. You may not have enough money to pay off your bills on time, or you may have other personal issues to tend to over paying your bills on the due date. These unintentional delays might reflect on your credit report and drag down your credit score. 

Your credit score is calculated based on your payment history, so it’s of utmost importance to pay for everything on time. The more delay you make in paying off your bills, the more serious its effects may look. Your potential lenders assess your reliability by looking at your credit score. They count it as one of the must-meet criteria to qualify for a loan. 

Typically, most credit organizations don’t appreciate late payments as they believe that a borrower who tends to pay late may be too risky to rely on. This will simply lower your chances of getting your funds approved, which may sometimes cause serious inconveniences. 

Accurate or Incorrect – Figure It Out 

Not all late payments are actually late. It’s worth remembering that late payments reflect in your credit reports only when lenders report them, and though it sounds surprising, it may happen in either of two ways: 

  1. You actually delayed the payment, and the lender’s claim is valid.  
  2. You have always made on-time payments, but the credit bureau or the lender mistakenly added late payments to your report. 

When the report is right, you may find it challenging to get it removed from your reports. Besides, the method is extremely time-consuming. Moreover, they probably won’t be removed for up to seven years. On the other hand, if it’s an incorrect late payment that the credit bureau or your lender has reported, you may find it relatively easy to get it fixed. 

Though fixing that error may also take several weeks, all the credit bureaus will essentially fix them because if they fail to do so, they will violate the Federal Fair Credit Reporting Act (FCRA regulation). Sometimes lenders also speed up the process with the help of rapid rescoring. It, however, is a paid service; thus, you should opt for this only when in a critical situation.

How Long Do Late Payments Reflect on Your Credit Report?

Late payments can reflect on your credit report for up to seven years from the actual date of the delinquency. Even if you have repaid your bills, the late payments will still reflect on your credit reports for seven years. It doesn’t matter how late your payment was or how quickly you made the payments.  You can know more about best payday loans online. However, the relief is that the impact of late payments reduces over time, and it works better if you have a single, one-time mistake, which other on-time payments have counteracted. You always have a 30-day period to repay your late bill before it affects your credit score. After 30 days, it may drag your credit scores down by 180 points. 

Delaying payments for less than 30 days: When you miss paying your bills on the due date but clear them within 30 days from the due date, credit card companies won’t report it to credit bureaus. However, a later fee may be levied. 

Delaying payments for more than 30 days: A delayed payment due for more than 30 days will show on your credit reports. Remember, you still need to repay, and you should do it as early as possible. 

Delaying payments for more than 60 days: When you fail to repay the late payment and still miss your next due date, a 60-day late notice will appear on your credit reports. This will badly affect your credit score. If you miss more payments, your credit reports will show all of them. Besides, credit card companies may close your account and send it to collection agencies. 

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3 Best Ways To Remove Late Payments From Your Credit 

If your credit report features a late payment and is lowering your credit score and preventing you from getting loans, there are three practical ways to get rid of the situation. 

  • Filling a dispute

To err is human – even a credit card issuer can make a mistake. However, if their mistakenly highlighted late payments adversely affect your credit score, you should definitely do something. Therefore, if you find that your credit report contains wrong information, you should simply file a dispute with the card issuer or lender. 

Upon filing a dispute, your creditor investigates the situation within 30 days. If they find that the payment information is wrong, they will inform the credit bureau about the matter and request to remove those payments. You can also file disputes directly with all the major consumer credit bureaus. The credit bureaus typically investigate the matter within 30 days of receiving the application. 

  • Writing a Goodwill Adjustment Letter

As the name suggests, you just need to write a letter! When you send this letter to your creditor, you can mention the reasons for getting late in paying. This is officially known as the goodwill letter, and it has the potential to help you get the late payments removed from your credit history. However, you should have a solid and considerable reason for not paying on time. 

Remember, you should be sure that your creditors have reported accurate information to the credit bureaus while writing a goodwill letter. Moreover, you should also be very clear about a simple fact – a goodwill letter never guarantees that they’ll surely remove an accurate late payment from your credit history. However, there’s nothing bad in giving it a try. 

You can also call your issuer instead of writing a letter, as it will speed up the process. This method works well if you have missed a payment for the first time. 

  • Writing a Pay-for-Delete Letter

In a few cases, the pay-for-delete letter may help you remove the late payments report. Pay-for-delete is a service that debt collectors offer, and it removes any collection account from your report when you pay it off. However, the method is not as convenient and lucrative as it sounds. All creditors need to report information with accuracy, and due to this reason, they may not consider removing missed payments even after receiving the payment for the account. 

The only situation that ensures the removal of late payments is when it’s a mistake from the creditors’ or credit bureaus’ end. Furthermore, pay-for-delete is a method of removing your loan account from paid collections. Therefore, it never guarantees removing your late payments from your credit history.

What if You Fail to Get Your Late Payments Removed?

Well, if nothing works, you are left with no other alternative than to wait for the next seven years to get the delayed payment histories removed from your credit reports. In the meantime, you can try to rebuild your credit. However, as an obvious consequence, you may find it harder to get approved for the best insurance rates and loans. 

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How to Rebuild Your Credit?

If you have a score below 580, you are among the 25% of citizens with poor credit scores. So now that you are not alone in the race, you should work dedicatedly to improve your score. After all, lenders find people with healthier credit scores more attractive. 

  • Review Your Report

Check your report and find out if any other factors contribute to poor credit. Simply request an annual credit report from any of the three major credit bureaus – Experian, TransUnion, and Equifax. If they point out errors other than late payments, take them seriously. 

  • On-Time Payments 

When you pay bills on time, it works as the primary driver of your credit score. So, if your credit report holds older negative information like late payments, try to counteract them with more timely payments. Your credit history will improve as you keep paying your bills on time. 

  • Get Rid of Overdue 

If you have bills that have been unpaid for long, get caught up again. You can search for credit card relief programs and join them if you are eligible. You can also consider reaching out to an authentic financial planner to find a viable way out. Additionally, you can get in touch with your lenders if you find it challenging to keep up with your bills. Typically, all good lenders arrange a realistic payment plan. 

  • Don’t Consume the Entire Credit Available 

The amount of credit you can access is called credit utilization. Keeping your credit utilization below 30% is always wise, reflecting that you are eligible enough to manage your credit responsibly. Besides, it shows that you don’t overspend.

  • Keep Monitoring

While rebuilding your credit score, it’s essential to keep an eye on your progress. Thus, use credit monitoring tools to check how well you are going. 

  • Authorized User 

If someone in your family or friend circle holds a good credit score, they can add you to their account and make you an authorized user. This way, you will be able to make purchases. However, the account holder will always be ultimately responsible for repayment. 

When they use their credit responsibly, it can help you to rebuild your credit score. Besides, you don’t have to undergo a credit check or a detailed application to become an authorized user. However, before you go, you shouldn’t essentially check with your credit card issuer to find out how they report authorized users to credit agencies. 

  • Get a Secured Credit Card 

When it comes to developing better credit, secured credit cards help a lot. They let you make purchases just like a conventional credit card. However, to acquire a secured credit card, you must put some money down from your pocket as a security deposit. Typically, credit card agencies report your status to the credit bureaus when you get a secured credit card. This ensures that on-time payments and responsible handling of the card will lift your credit score gradually. 

  • Getting Installment Loans 

A few lenders approve loans to people who don’t have a good or even considerable credit score. You can reach out to them and apply for an installment loan with standard monthly payments. Moreover, these loans typically feature predictable payment schedules and fixed interest rates. 

These loans are useful for debt consolidation and paying off your other overdue. This one-time loan allows you to acquire some lumpsum money, and when you pay off your monthly installment, that payment reduces your low balance and covers the interest cost. This eventually brings down your loan balance to zero and pumps up your credit score. 

However, if you keep missing on these payments as well, you will lower your chances of acquiring funds from lenders in need. Different types of installment loans include auto loans, student loans, home equity loans, RV loans, landscaping loans, etc. When considering an installment loan, keep a crucial thing in mind – borrow only when it makes sense. 

Borrowing With a Low Credit Score 

A poor credit score may create difficulties in getting loans; however, that never means all doors are closed for you. There are a few tricks that may help you to get funds from lenders even if you hold a poor credit score. 

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  • Extend your search horizon

How the cut-offs in credit scores will be assessed may vary from one lender to another. While some lenders may set a higher cut-off in credit scores for approving loan applications, others may still offer loans to those who don’t have an up-to-the-mark credit score. Therefore, you should do a little elbow grease as a loan applicant with a lower credit score. Invest some time in finding lenders offering factors other than credit scores while approving the amount. These factors may include your monthly income, job profile, area of residency, etc. 

  • Get a Joint Loan

You can apply for a loan with the collaboration of someone who holds a good credit score. Your co-applicant may help improve your loan eligibility. Besides, you can also use a guarantor who can take up the liability of loan repayment in case of default. This will lower the risk for the lender, improving the chances of approval.

  • Check for Payday Loans 

Typically, payday loans feature a lower disbursal amount. Besides, their interest rate is also high. Due to these reasons, many lenders provide easy payday loans that involve the least checks. These loans are designed to help people with poor credit who need some quick funds to manage emergencies or situations. Payday loans, however, hold a dedicated upper limit; if you don’t pay them off on time, they can severely affect credit scores. 

  • Apply for a Secured Loan

Getting approved for unsecured loans like personal loans can be tedious if you have a poor credit score. In this case, you can always opt for secured loans like credit card loans or collateral loans. While credit card loans (where you pay some money in advance to acquire a credit card) may levy high-interest rates, the secured loan may come with a lower interest rate as they are already backed with enough liquidity. These loans pay the least attention to credit scores regarding approval. 

  • Apply for Smaller Amounts 

Some lenders can even sanction personal loans to poor credit score holders if the amount is small. In case you manage to avail one, make sure you don’t fail to pay them regularly. This will help you improve your credit score, strengthen your creditworthiness, and make way for loans with higher amounts. 

How to Avoid Late Payments?

Removing late payment history and applying for loans with bad credit is okay. However, to avoid worse consequences of late payments in the future, the wisest idea is to pay off your bills on time. There are a few ways out if you find it difficult to manage timely payments. 

  • Set Payment Reminders

Setting up calendar reminders or email and text alerts for payments may be one of the best ways to avoid late payments. Typically, every credit issuer allows you to set reminders for your statement’s due date. When you are due with your payments in a set number of days, the reminder hits in your inbox or pops up as a notification. If you set a calendar alert that notifies you a few days before your repayment, you may even manage to arrange money in case you run out of funds. 

  • Setting up Automatic Payments

This is probably the most convenient way to prevent late payments. You can set up the auto-pay for the minimum payment due or the total statement balance. You can avoid paying interest if you set it up for the total statement balance. However, if it looks challenging, you should choose to pay the minimum due.  

  • Changing the Due Date

You may definitely have more than one bill to pay. It’s also possible that your due dates keep arriving throughout the month. But, payday comes only twice or once a month. In such scenarios, you can contact your lender and request to change the payment date at your convenience. This will help you manage your money better, and there will be fewer chances of missing payments. 

Frequently Asked Questions Regarding Late Payments 

  • What if your bill is due on the weekend?

If your payment is due on a weekend or holiday but your lender receives the amount by the next business day, it is not considered a late payment. According to the Consumer Finance Protection Bureau (CFPB), if the due date is a day when the card issuer doesn’t accept or receive emails (for example, on National holidays or Sundays), they should never consider a mailed payment as late. 

However, this applies only when you make the payment by 5 pm on the next business day. Another factor to consider is that the issuer considers the day the payment reaches their hand, not postmarked date. Therefore, if you have made a payment before the due date, but it is delayed because of the mail delivery system, your issuer will call it a late payment. To avoid all these hassles, it’s better to pay your bills online. However, the next business day regulation doesn’t apply to online payments; if your payment is delayed, it’s considered late. 

  • Is there any chance of getting late payments forgiven?

When you miss a payment, don’t panic, your lender may help you out. However, it’s worth remembering that not all late payments are eligible for forgiveness, but there is no harm in asking. If you have missed your bills for the first time, your lenders may waive the late fee charges. On the other hand, repeat offenders shouldn’t expect something favorable. 

Apart from that, if you have been a long-term customer of your lending agency, it’s more likely that your late fees will be waived. You should reach out to the lender at the earliest to get a late fee forgiven. If you miss this, and the span of non-payment crosses 30 days, it will show up on your credit report. 

If you catch your mistake early or know that you will miss your upcoming payments due to financial constraints, reach out to the issuing authority at the earliest opportunity. You can explain to them what’s stopping you from making the payments and ask them to help you with an option. Even your lenders wait before reporting anything to the credit bureaus. 

  • How to ask for a waiver of late payments?

There are several ways to deal with late payment fees. You can negotiate late payment charges with your credit issuer. Let your issuer know the reason for the late payment and request them to waive off the fees. If you are a first-time defaulter, your lender will probably waive the fee. 

Apart from that, to prevent late fees, you can set up auto repayments or payment reminders so that you create no room for late payments. You can also change the due date, or you can ask for a grace period. 

  • Can you have a 700 credit score if you have late payments?

Payment history accounts for approximately 30% of credit score. If your lender reports a single late payment to credit bureaus, it can bring your score down. Besides, this negative information will appear in your report for the next few years. However, that doesn’t mean just a few late payments will surely ruin your good credit. It’s still very much possible to hold a 700 or above credit score even if you have some late payments in your credit report. 

Remember, credit scores are an everchanging number, and you can affect them positively when you manage your credit accounts sensibly. When you miss any payment, do whatever it takes to pay it off before 60-90 days from a missed due date. 

Maintaining a 700+ credit score may seem impossible if you miss doing so. Another point to remember is that the older your late payment is, the better your options for pulling up your credit score. However, you must ensure that you manage your due payments responsibly. In a nutshell, a single late payment can wreck your credit forever, and you can still have a 700+ credit score with a late payment on your credit report. However, to maintain your score, make sure most of your payments are on time, your credit utilization is low, and your overall money management is responsible. 

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Conclusion: What To Do If You Are Late To Pay Off Loans? 

Though it may look time-consuming, removing late payments from credit reports is possible. Therefore, even if your credit report reflects a few repayments, that’s not the end of the story. Apart from removing them, you have other options like sensible money management and a responsible repayment pattern that can help you hold a good credit score even with a few missed repayment details in your credit report. 

In case your credit score has already declined because of late payments – don’t lose hope; you can still arrange quick loans when you are in need. We’ve also listed some tips to help you stay away from late payments in the future. Make sure to automate your payments or reach out to your lenders in good time if you can’t make the payment. Furthermore, some empathetic lenders offer viable solutions like payday loans and more. Late payments on your credit report are not the end of the world; you can get rid of them. Good luck! 

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