If it is your first time with a late payment, you may be asking, “How long until it affects my credit?” It is understandable because a good credit score comes in handy when you want to get a mortgage, car loan, or student loan.
If you have missed a payment, you need to know how that affects your credit.
When Do Late Payments Affect Your Credit Report?
A credit report includes information about your borrowing and repayment history. Lenders rely on this report to determine whether you can borrow money, at what interest rate, and whether or not you’re likely to repay the loan.
Are you late on your payments? A late payment won’t be reported if you make the payment before 30 days. However, if you are between one and twenty-nine days late, you will most likely still have a late fee, even when it is your first late payment.
If you make another late payment within six months, you may be slapped with an even higher fee. Late payments could also affect your interest rate on future loans.
When will your late payment be reported? When you miss a payment for more than 60 days (between 60-150 days), it is reported as a late payment and is reported as charged-off at 180 days.
A charged-off account is an account that is closed and written off as a bad debt by the creditor, and the debt is sent to collections. Remember that your payment history accounts for 35% of your total FICO credit score.
How a Late Payment Affects Your Credit Score
If you have multiple late payments during this period, each shows up as a separate entry on your credit report. Longer delinquency has a bigger negative impact on your credit score than a shorter one. Therefore, a 30-day late payment has a lesser impact than a 90, 150, or 180-day late payment.
If you have more than one delinquency, your report has a more significant negative impact that greatly affects your score.
The good news is that delinquency becomes insignificant as time goes by, and creditors will not use it to determine your interest rate or loans. How long late payments stay on your report depends on your debt. However, most payments fall off your credit report after seven years, while some, such as bankruptcy, may stay on your credit report for up to ten years.
Removing Late Payments From Your Credit Report
If you have late payments on your credit report, you may be wondering how to remove the late payment. The good news is that there are several ways to get rid of late payments and other negative information from your credit history.
Pay off the debt
The most effective way to remove late payments is to pay off the debt in full before paying anything else. Once you’ve made the payment, it is no longer considered late, and it is removed from your credit report as well as any other negative information associated with that account.
Make a plan to pay off the rest of the debt in installments or find an alternative solution such as debt consolidation or personal loan options that help you pay off the debt.
Dispute wrong information
The Fair Credit Reporting Act (FCRA) gives you the right to dispute your credit report. You have the right to have inaccurate information removed from your credit report, and you can request a complete copy of your credit report once per year.
To dispute an item on your report, you’ll need proof of what happened, such as copies of letters you sent or emails you received from the company. You also need to provide evidence that the credit reporting agency has the wrong information and provide copies of records showing you made the payment.
To achieve this, you have to write a letter explaining why the information should be removed from your report.
Use credit repair agencies
This means that they contact the creditor and negotiate with them to remove negative information from your report. Credit repair agencies also know and understand the statute of limitations in each state and use their knowledge to dispute any debt that has fallen off.
A late payment on your credit card, loan, or mortgage is a big deal. It can cause your credit score to drop, and it could cost you thousands of dollars in higher interest rates.
A more positive outlook toward a more financially secure future starts today. Give the Ascent Network a call today at 1-877-871-2400. Ascent Network helps consumers all over the United States and is available locally in Huntington Beach, Coachella Valley, Palm Springs, Cathedral City, Rancho Mirage, Palm Desert, Desert Hot Springs, Indian Wells, La Quinta, Indio, and Thousand Palms.