None of us ever intend to make a late payment, but as the old saying goes…
Sh*t happens!
Things go wrong, mistakes are made, and real life gets in the way. Maybe you missed a step when setting up auto-pay, or you switched banks and forgot to set up the payment, or the invoice got sent to your spam folder.
Consumer finance expert Bruce Politano told me about how he missed a few payments when he was in a motorcycle accident and had to spend 11 days in hospital.
Whatever the reason, it’s happened to 64% of Americans according to a LendingTree Survey in 2022. That’s most of us!
Despite it being an accident or out of your control, missed payments unfortunately still impact credit scores a lot. This is because lenders see missed payments as a huge red flag.
That’s why removing late payments from a credit report is such an important step in repairing credit and boosting a credit score.
In this guide, I’ll walk you through the steps you need to remove late payments from a credit report, and how using credit repair software can make it much easier.
Lots of factors go into calculating someone's credit score, but payment history is the single largest factor, according to data analytics company FICO.
“How many points can a late payment affect my credit score?”
This is a question I’m asked all the time, and the answer is quite staggering. Late payments can affect scores by up to 192 points.
To put that in context, credit scores range between 300 and 850. So 192 could be the difference between “poor” credit and “very good” credit, or even “fair” and “exceptional” credit.
“How many points will my credit score increase when a late payment is removed”
This means that getting a late payment removed from your credit report could boost your credit score by up to 192 points. Obviously, this depends on how many late payments you have, and the weight of each missed payment, but it highlights why it’s so important to remove these from your credit report.
Before I answer the question how long does a missed payment stay on your credit report, it’s important to note that late payments aren’t reported on a credit report until they’re at least 30 days past due.
But after these 30 days, they will fall into one of the following categories:
30 days
60 days
90 days
120 days
150 days
After this, it’ll be given the “charged-off” status, which essentially means the creditor has written off the debt as a loss.
The later the payment is made, the more damage it’ll do to your credit score, and the longer it’ll take to leave your credit report. For an example of how long for late payments to fall off, it can take between nine months and three years for a score to fully recover from a 30-day late payment. Whereas a 90-day late payment can take between nine months and seven years.
This is because late payments that are 90 days late or longer are considered a ‘Key derogatory item’. These items are generally considered to be the most severe negative factors on your credit history and can make it difficult to obtain new credit or loans.
As well as impacting your ability to get new credit, this can also impact your existing credit. This is because most credit card companies run a soft search on existing cardholders to see if there were other accounts that experienced late payments.
If they see any late payments from other creditors, they’ll commonly lower your available credit line or even increase your interest rate. This can happen even if you’ve never had a late payment with that specific creditor.
(I know, it sucks!)
I know that all sounds pretty bad so far, but I’ve also got some good news for you.
It’s not as hard to remove late payments from your credit report as you might think. In fact, all it takes is a little creativity and empathy, combined with a process called a ‘Goodwill deletion’.
A goodwill deletion is a polite request for the creditor to remove one or more late payments. You do this by explaining the valid and compelling reason for missing the payment, and by promising to make all future payments on time.
Removing payments is a great way to repair credit, but there are a couple stipulations. For a start, goodwill deletion will only work for accounts that are ‘Current', meaning there is no past due amount.
Also, if the account is closed, you should request the removal of the entire amount (not just the late payments), as the goodwill deletion is mostly based on your previous stellar payment history.
So, you’ve got an open and current account and a great payment history, but you’ve got one or two pesky late payments to take care of?
The goodwill deletion letter is here to save the day!
You’ll send your goodwill letter to the creditor, politely and persuasively asking them to remove the late payment. You do this by providing a very convincing reason why the payment was late, and will never happen again.
This process is much like a child trying to convince their parents to unground them. It’s all about sweet-talking them into understanding your side of the story. Pulling at their heartstrings so they develop sympathy for your situation.
Maybe your baby was born that month, you were hospitalized, or maybe like poor Bruce you were in a motorcycle accident. Whatever it is, it has to be good enough to convince them that it would have been extremely difficult to have made payment on time.
Here’s a list of the information you’ll need to provide in your goodwill deletion letter:
Your/your client's information
The length of the relationship between the customer and the creditor
The request for a goodwill deletion for reporting to the Bureaus
The length of consistent, improved, on-time payment history
Specific, personal reasons for late payment and why the late payment was a one-off
To make this even easier for you, we’ve created this goodwill deletion letter template you can download for free. I also recommend using a credit repair tool like Credit Repair Cloud to make it easier to identify late payments, and find the details of your creditors.
To find out who reported a late payment on your credit report, you need to obtain a copy of your credit report. Once you’ve done that, you can then contact the creditor to dispute the late payment if you believe it is inaccurate. Using a credit repair tool like Credit Repair Cloud makes it easy to review your credit report and send the dispute letter.
Some creditors may be willing to remove a late payment as a courtesy, especially if it is a minor late payment and you have a long history of good payment behavior. You can always try to negotiate with the creditor to have the late payment removed, but there is no guarantee that they will agree.
You can remove a late payment from your credit report by contacting the creditor who reported the late payment and asking them to remove it. If the creditor is unwilling to remove the late payment, you can dispute it with the credit bureaus. If the creditor cannot verify the late payment, the credit bureau will remove it from your credit report. You should also consider using a credit repair tool like Credit Repair Cloud to help you with this process.
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