Clock, stacks of coins and calendar with a payment due date, to illustrate the idea of removing a late payment from a credit report.
Betsy Wise
By: betsy_wise
Read in 7 minutes

Can You Remove a Late Payment from Your Credit Report?

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Growing your business is an exciting event, especially if you take the steps to strengthen its foundation by applying for a small business loan. As part of the lending process, lenders review your credit report and look for any red flags such as a late payment or defaulting on a mortgage. They’re just as excited as you are to grow your business but their job is to verify your credit worthiness. Even if your credit summary includes negative entries, you’re not without options. You can clean up your credit history to make a more favorable impression on lending institutions and position your business for future expansion.

What Is a Credit Report and Why Does It Matter?

Credit reports could be called financial report cards because they list everything about your credit activity. Lenders are able to gauge your paying habits by reviewing information relating to accounts that are in good standing and any that aren’t. These documents provide detailed information relating to credit limits, credit inquiries, and any liens issued by creditors for repayment of loans. Consequently, all of your credit information determines your credit score which lenders look at in depth when making loan decisions. A lower score affects whether lenders offer you a loan and determines the interest rates they charge. Therefore, it’s important that you understand how to read a credit report and keep your score at least 700 or higher. To achieve that goal, you can take steps to remove negative information posted to your credit summary.

How Does a Late Payment Affect Your Credit Report?

Should a late payment appear on your credit report in 2018, it won’t drop off until 7 years later, in 2025. Because these types of entries make up 35% of your overall FICO credit score and lenders lean heavily on your credit history and score, it’s important to minimize the number of negative items that appear on your credit summary.

A single 30-day late payment delinquency has a less negative impact on your credit report compared to a series of 30, 60, or 90-day late pays. Seven years seems like a long time to wait but when you always pay your bills on time you’ll see your credit score gradually go up each month. At first, you may be alarmed to see the negative impact delinquent notations can have on your credit but there are ways to keep your credit score in the good to excellent range.

Three Ways to Remove a Late Payment from Your Credit Report

1.    Dispute the Late Payment with Creditors

More than likely you already have a good relationship with your creditors because you’ve been making payments on time. If so, most creditors are willing to make a goodwill adjustment to your account. If the delinquency was your fault, write a letter explaining why it occurred and ask the creditor to write off the entry. Provide as much proof as possible to validate why the occurrence happened. Keep in mind it’s possible the creditor or credit bureau made the error inadvertently. If they agree to remove the item from your record, ask them to notify the credit agencies so the adjustment posts to your credit overview. A second way to remove late payment entries is a friendly negotiation. Offer to sign up for automatic payments or pay off the account balance. Creditors will appreciate your good faith efforts to pay your bills in a timely fashion.

2.    Dispute the Late Payment with Credit Bureaus

Three major credit institutions, Equifax, Experian, and Transunion, gather credit information about consumers. It’s up to you to make sure that the credit information they outline is accurate. For convenience, you can request a free report from these agencies once a year.  If you see a late payment entry on a credit bureau outline that’s a mistake, contact them immediately to point out the error. If they aren’t able to verify whether the information is accurate, they are required to remove it. Just make sure to contact them later and request a copy of the revised document to double check that they removed the negative entries.

3.    File a Complaint

If you’re having difficulty getting results from creditors or credit bureaus, contact the Consumer Financial Protection Bureau (CFPB) founded in 2011. They stand up for you in case lenders, creditors, and other financial institutions fail to treat you fairly. Once you contact them, they will listen to your complaint and provide information on how to correct inaccuracies and how to build your credit record. They provide consumer tools, research, and other valuable resources to keep you informed about your credit history.

Conclusion

You may be responsible for some of the entries on a credit report while others are erroneous. What’s important is that once you see these negative items, you take action to try and remove them. As indicated above, it’s easy and free to get your credit report and stay on top of your credit score. But remember you aren’t alone when you encounter problems or grow your business.

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