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How to remove late payments from credit report?

15 July 2010 One Comment

Q: I need to know how to remove two late payments from my credit report. Can you remove late payments to begin with? Or at least dispute them? I found a nice townhouse and applied for the mortgage, but Chase loan officer explained I have a 30 day late credit card payment from some 18 months ago and a very recent 60 day late on car loan that not even mine. I cosigned for my sister just over a year ago, she was paying fine, then she lost her job and now this. My TransUnion score is 611, Equifax is 637 and Experian is 629. I can put 20% down if I have to. Chase said they would do a loan, but the rate will be around 6.75%. I went to Bank of America and they quoted me 6.5%. If I only can remove these late payments.

A: You can only remove late payments from your credit report if you have some proof that they have made it there by mistake. In your case, you are stuck with them. You can try to dispute the 60 day late payment on your car loan and may be manage to remove it. Well, dispute actually is incorrect word. You can write a letter to the lender and explain the situation. Tell them that your sister did not inform you about it, and you learned about it only because you applied for the mortgage. Is the loan seriously past due? Of course, it is silly of me even to ask. You may even have another late payment coming. Offer them such a deal – you bring the loan up to date and basically take over the payments, and in return they remove late payments and change status to Paid As Agreed. I will try to post a letter that you can use soon enough. Judging by your current scores, your credit before these delinquencies was quite good, and that may help.

The question on how to remove late payments comes to my inbox often enough to emphasise one thing over and over again. Unless you can prove that a given late payment does not belong to you, you can not dispute it, negotiate it and remove it. Sort of like that Kyle Reese monologue from the original Terminator movie where he explains to Sarah Connor what the machine is all about. Many however, underestimate initially the impact late payments have on their credit reports and scores, only to try feverishly to remove them later on with no effect. While the 30-day late is considered somewhat mild delinquency, it will decrease your score substantially, and potential lenders do not want to see it, especially in the days when they are stingy with credit even if your scores and report are good. The 60- and particularly 90-day late payments are counted as very serious delinquencies and cost you dearly in terms of credit points. See What affects credit score according to FICO.

Why late payments have such strong influence on credit scores? Because FICO algorithm counts negative information such as late payments, bankruptcies, collections and judgments toward 35% of its scoring criteria and other non FICO algorithms consider those quite heavily as well. That is why so many for-profit counselors are out there trying to convince you to pay them in order to remove lates from your credit report. They, of course, know well enough that they just give you empty promises for some very real cash. The only thing that can successfully remove late payments is time. 7 years to be exact, from the month in which the late payment was due.

One Comment »

  • a1creditguide said:

    Yes, I would definitely have to agree that late payments will substantially lower the credit score. Some people honestly do not know how they developed late payments on their credit reports if they just knew they were making timely payments. Late payments can be disputed. The burden of proof lies with the credit bureaus. If a listing is inaccurate or unverifiable, it must be deleted.

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