If you make a payment late, it gets marked on your credit report. But will it stay there forever? What if the late payment was a mistake on the part of the creditor? Will it still stay on your credit report?
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While a late payment isn’t something to take lightly, the good news is that it won’t sit on your credit report forever. If you really did make the payment late, it will stay there for seven years. While that seems devastating, it won’t affect your ability to get a new loan for seven years. It may affect your chances for the next 12 months, but if you pick up the pieces and stay current from there on out, you should be in good shape.
What is a Late Payment?
Before we go into further detail about how late payments affect your credit report, you should know what a late payment is according to the credit bureaus. It’s not a payment you make a day or two past the due date. It’s a payment that you make more than 30 days after the due date. The 30-day mark is the cutoff for credit bureaus. If you make your payment before the 30-day mark, the credit bureaus will never know.
Correcting Incorrect Late Payments
If you pull your credit report and find that you have a late payment on a bill that you know you paid on time, you have to get it corrected. The credit bureau or even the creditor isn’t going to fix the information on their own.
You have to write the credit bureau and the creditor a letter stating that the information is incorrect. You also need to provide them with the proof proving that it is wrong. The more proof you can provide the credit bureau, the easier it will be to have the information changed. Once you write to the credit bureau, they have 30 days to resolve the issue with the creditor. If the creditor doesn’t respond, the credit bureau must remove the information from your credit report.
Correcting Late Payments From Seven Years Ago
If you pull your credit and notice that you have late payments reporting from seven or more years ago, you can dispute them too. It doesn’t matter if you had a 30-day late or you had what started as a 30-day late, but turned into a 90-day late. The clock starts with the first 30-day late payment. If it’s been seven years since that point, you can write to the credit bureau and ask them to remove the information.
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This may not greatly affect your credit score since it occurred so long ago, but it can affect a future lender’s opinion of you. If you don’t have any late payments, even going back seven years, the lender will look at you as a financially responsible person. If you still have the late payments reporting, though, especially if they are more than 30-day late, it can give your application a negative connotation.
The Exception to the Rule
Now if you really did make your payment late, you’ll just have to deal with it being on your credit report. The best thing you can do is make sure the rest of your qualifying factors are in perfect condition. This means that you have stable income/employment and a low debt ratio.
You may hear that writing a ‘Goodwill Letter’ to the creditor and asking them to remove the late payment as a one-time courtesy, but it’s not a good idea. Legally, lenders have to report all information, good and bad. The only way you may be able to stop a creditor from reporting your late payment is if you talk to them before they report it to the credit bureau. In this case, a Goodwill Letter may be in order. If you can make things right with the lender, they may not report it. This may work in extenuating circumstances that forced your payment to be late, but not in cases where it was just oversight.
Late payments may appear on your credit report for as long as seven years, but they won’t haunt you for that long. They may force you to make sure the rest of your qualifying factors are in great shape, but that’s certainly not a bad thing when you are trying to get a loan.
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