There are many details that go into the calculation of your credit scores. But nothing is more important from a credit scoring standpoint than your payment history. Making or missing payments can make or break your credit scores.
Case in point, your payment history accounts for 35% of your FICO credit scores. Payment history is worth 40-41% of your VantageScore credit scores, depending on the VantageScore version (3.0 or 4.0) used.
So when a late payment or late payments appear on your credit reports, there’s reason to be concerned. A late payment can cause significant damage to your credit scores, especially if the late payment is recent or severe. If you discover late payments on your credit reports, you may wonder if there’s anything you can do to correct the problem. The answer to this question can be complicated.
A late payment may remain on your credit report for up to seven years as allowed by the Fair Credit Reporting Act (FCRA). Other times, you may be able to get a late payment removed from your credit report much sooner. And, if you’re really lucky, you may just be able to convince your lender to change the record of a missed payment to show you made your payment on time.
Scenario #1: Credit Report Errors Can Be Corrected
The Fair Credit Reporting Act (FCRA) is the federal law that gives you the right to dispute inaccurate information that appears on your credit reports.
If you check your credit reports from Experian, TransUnion, or Equifax and discover a late or “missed” payment that shouldn’t be there, you can contact the credit bureau(s) involved in the error and ask it to delete the mistake.
When a credit bureau receives your dispute, it has 30 (sometimes 45) days to perform an investigation, although the credit bureaus generally resolve disputes in about half that time. At the end of their investigation, the credit bureaus must either delete, update, or verify that the late payment you disputed is accurate and inform you of the results of their investigation.
You have the right to manage the dispute process on your own free of charge. But if you prefer, you can hire a professional credit repair company to work on your behalf.
If you decide you want to work with a credit repair company, it’s wise to compare multiple options and look for a company that complies with the Credit Repair Organizations Act (CROA). A sure sign they’re bad news is that they’ll guarantee they can delete missed payments from your credit reports or they’ll attempt to charge you in advance for their services. Neither of those two things is legal.
Scenario #2: Fraudulent Accounts Can Be Removed or Otherwise Corrected
Checking your three credit reports from time to time is a good way to be on the lookout for fraud and identity theft. When a missed payment appears on your credit reports, it can damage your credit scores even if that missed payment is attached to an account that isn’t yours.
If you discover a fraudulent account (with or without late payment activity) on your credit report, you can visit IdentityTheft.gov to file an identity theft report. You’ll need to submit a copy of your ID theft report to a credit bureau along with a dispute identifying fraudulent information. The credit bureau has up to four business days and if it finds your fraud dispute to be authentic, to block those items from your credit report.
A word of caution: Some consumers and credit repair companies will file fake fraud disputes claiming the consumer has been the victim of fraud in an attempt to avoid their liabilities. Filing false police reports or false identity theft affidavits with the FTC is illegal and can land you in hot water.
Scenario #3: Legitimate Late Payments May or May Not Be Removed
When a legitimate late payment appears on your credit report, you’re at the mercy of the creditor to determine whether it will ask the credit bureau to remove the derogatory information.
Per the FCRA, the creditor can ask the credit bureau to leave the late payment on your credit report for up to seven years from the date the late payment occurred. But it doesn’t hurt to ask for a favor.
You can call or write your creditor to request a goodwill removal. In general, you have the best chance of getting a goodwill removal of a late payment if your account has been in good standing otherwise. For example, if you’ve had a loan with a lender for several years, you’re current on your loan, and the late payment in question was your first and only delinquency on the account.
If you’re constantly late, however, the chances of this working are between slim and none. The creditor is less likely to work with you if your account history is full of repeat late payments.
Other Potential Ways to Improve Credit Reports and Credit Scores
Removing a missed payment from your credit reports before it ages out is not possible. Lenders, credit card issuers, and other creditors are within their rights to ask the credit bureaus to leave accurate late payments on your credit reports for up to seven years.
But you can take steps in the meantime that can yield improvement in other areas, such as:
- Pay Down Credit Card Debt: If you owe outstanding balances on your credit cards, paying down that debt may benefit your credit scores. When you reduce your credit card balances, your credit utilization rate may decrease as well. In general, lower credit utilization is good for your credit scores.
- Ask for a Credit Limit Increase: Asking for a higher credit limit on your credit cards is another way to reduce your credit utilization rate/ratio and improve your credit scores. This is a potential credit improvement strategy to consider if you need some time to pay off your credit card debt.
- Become an Authorized User: Having a friend or family member add you to a well-managed credit card as an authorized user can help you to build positive credit. For the best results, consider asking someone you know to add you to a credit card with no missed payments and a low credit utilization ratio.
Avoid Future Late Payments
Missed payments have the potential to damage your credit scores. You should do everything in your power to avoid missing the due date on your credit cards and other credit obligations. That is the only guarantee you have to never end up with missed payments on your credit reports.
If you wind up with a late payment on your credit reports, one of the aforementioned strategies may help you get it removed from your credit reports sooner rather than later. But, if you’re unsuccessful, your best bet is to avoid repeating the problem and focus on keeping the rest of your credit reports in the best shape possible. Remember that two-thirds of your FICO scores have nothing to do with missed payments.