November 29, 2021

Supremeuk

Business & Finance

5 Steps to Remove a Late Payment from your Credit Report

5 min read

Late payments are scary. Despite your best intentions, late payments can happen to anyone. A job loss, delayed salary, and a medical emergency in the family are common reasons why borrowers fall off the loan payment track. If you have a late payment reported on your credit report, it may be possible to remove it. 

In this post, credit experts from CreditMantri share tips on how to eliminate late payments from your credit report. 

First things first, 

How do late payments impact the credit score? 

Your credit score is a numerical indicator that helps lenders evaluate your creditworthiness. The credit score comprises multiple factors like on-time payments, a healthy mix of credits, credit utilisation ratio, length of credit history, total debts owed, etc. 

Of all these factors, payment history accounts for 35% of your credit score. So, late payment harms your credit report and hurts your score significantly. 

  • Even a single late payment can cause your credit score to drop down by a few points. 
  • Late payments turn your credit cards and loans pricier. Frequent late payments can cause lenders to increase credit card interest rates and the interests charged on future loans. 
  • In the worst case, you may not even be sanctioned a loan or find it challenging to get a credit card with high limits and benefits. 

This is why financial experts caution against late payments. You must pay your credit card bills, loan EMIs on time and every time. 

So, what do you do if you have a late payment on your credit report? Is it possible to get it removed? Let’s explore the options available. 

Is the Late Payment Accurate or a Mistake?

A late payment is reported on your credit report whenever there is a delay in credit card payments, loan EMIs, or other credit payments. A late payment can happen due to one of the following two reasons:

  • You missed a loan/credit card payment, and the entry in your credit report is valid. 
  • On the other hand, you never paid late or missed a loan payment. The entry on your credit report is a mistake made either by the lender or the credit bureau. 

Note that if the late payment is a mistake, then it’s relatively easier to get it removed. 

Steps to Get a Late Payment Removed from Your Credit Report

So, you have missed a loan or credit card payment, and you’re worried that it may hurt your credit score. It’s not time to panic. You can take the right steps to remove the late payment and get your credit score back to normal. 

We list out the action steps you need to take to remove a late payment from your credit report. 

Step 1: Check your Credit Report 

If you’ve paid a bill late or suspect that a missed loan payment impacts your credit, the first step is to request a copy of your credit report. You can get a copy of your latest credit report at trusted sites like CreditMantri

Download and review the report thoroughly. The credit report contains a detailed list of all your credit transactions. Check if the lender has reported the late payment to the credit bureaus. Sometimes, lenders offer grace periods for borrowers to get back on track. If you have paid the bill during the grace period with penalties, the lender may not report it. 

Before you continue with the other steps listed below, you need to confirm if the late payment has been reported or if you have been granted an excuse this time. 

Step 2: Check for Errors  

Once you have the credit report in hand, the next step is to review it thoroughly for any errors. Sometimes you may have paid a credit payment. Still, the lender may have mistakenly reported it as a late payment due to technical or administrative errors. 

This is why financial experts recommend maintaining a digital copy of all bill payments, especially the bigger ones like loan payments, credit card bills, etc. Having a copy of the payment (with the time and amount) makes it easy to dispute it later if the situation arises. 

Step 3: Request the Erroneous Late Payment to be removed from your Credit Report 

If you notice an erroneous late payment, you can request to remove it from the credit report. You can directly raise the dispute with the credit bureau online. Suppose the bureau doesn’t have supporting information to verify the late payment. In that case, they are obliged to remove it from the report. 

Alternatively, you can also raise the dispute with the lender. Let them know that you have made the payment on time, but it has been mistakenly reported as late on the credit report. Send an email with all supporting documents (proof of payment, copy of your credit report) to the lender’s loan/credit card team. The lender will look into the issue and, if you’re proved right, will pass the information to the credit bureau to get the late payment removed from your credit report. 

Step 4: Negotiate with the Lender to get the Late Payment Removed 

If the late payment on your credit report is genuine, the next step is negotiating with the lender. Here are the steps to follow for a successful negotiation:

  • Connect with the lender’s team for late-payments and present your case politely. Explain the reasons for the late payment. 
  • While, by default, lenders are not obliged to remove the late payment from the records, they may be willing to remove it in some cases like:
    • The reason for late payment is genuine, like a natural disaster, job loss due to circumstances beyond your control, medical emergency, and other hardships. 
    • In such cases, the lender may agree to a goodwill deletion, especially if it’s one-time and you usually pay all your bills and EMIs on time. 
  • You can offer the lender something in return, like a one-time payment to clear the pending dues in return to remove the late charges from the report. 

Negotiating with the lender may or may not work in your favour, but it’s worth trying.  Generally, most lenders are willing to remove the late payment, especially if the borrower has a stellar repayment track record. So, the outcome of this step depends on your previous relationship with the lender. 

steps 

If the above steps didn’t yield the desired results, the next step is to seek professional help. Companies like CreditMantri can help you resolve late payment disputes and show you how to improve your credit scores. They charge a nominal fee for the service, but it’s worth it, as it can help you boost your credit scores and make it easy to avail future loans and credit cards at the best possible rates. 

The Bottom Line

Getting a late payment removed from your credit report is not easy. This is why experts caution against late payments. As they say, “prevention is always better than cure.” Try to avoid late payments in the first place by paying your credit card bills and loan EMIs on time. Maintain a backup fund to pay your credit bills in unexpected situations like job loss or a medical emergency. 

If, unfortunately, you find yourselves with a late payment, follow the steps above to remove the late payment from your credit report. Use the tips listed here to ensure robust credit health. 

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