How Can I Correct a Late Payment Misunderstanding?

How to Correct a Late Payment Misunderstanding

It is worthwhile to address the problem of a late payment mishap, since accurately reported late payments will stay on your credit report for seven years and negatively affect your credit score. Making sure your credit report includes only correct personal and financial data will ensure your credit scores reflect your positive credit management and payment history. Here's what to do.

1. Figure Out Exactly What Happened

First, check all three of your credit reports from Experian, TransUnion and Equifax. You can access them for free once a week on AnnualCreditReport.com, and you can view your Experian credit report for free anytime by signing up for an Experian account. Take note of the account number and creditor for the account with the late payment, the date it was reported past due and the amount of the payment.

Then check your own records. Collect any documents confirming that you paid on time, such as bank statements. Determine as best you can how the misunderstanding happened, or whether it was purely an error on the part of the lender or credit card issuer.

Learn more: How to Remove Late Payments From Your Credit Report

2. Contact the Creditor

Next, dispute the incorrect information with the creditor. Let them know exactly what data on your credit reports is inaccurate, and include copies of all supporting documents you gathered to back up your case. Request that the creditor contact the credit bureaus to update the reported information.

You can use this sample letter from the Federal Trade Commission as a template. To make your request clear, include copies of your credit reports with the inaccurate data and circle the items you want corrected. It's best to send the letter via certified mail and request a return receipt so that you get confirmation that the letter was received.

Under the Fair Credit Reporting Act (FCRA), the creditor must investigate your request, and within 30 days you'll receive a response with the outcome of the investigation. If the creditor confirms it will remove the inaccurately reported late payment, it will contact the credit bureaus to correct your credit report, which may lead to an increase in your credit scores after some months.

3. If Necessary, File a Dispute With the Credit Bureaus

If your creditor does not contact the credit bureaus to have the payment information corrected, you can dispute the information directly with the credit bureaus yourself. Each credit bureau allows you to file a dispute online, by mail or by phone. It's likely easiest to complete the process online; you can use Experian's online Dispute Center, for example, by creating an Experian account and uploading all the relevant documents you gathered in the previous step.

The credit bureaus must then conduct their own investigations, which may involve contacting the creditor. Disputes are typically resolved within 30 days, and could result in deletion of the late payment from your credit report. That, in turn, could lead to improvement in your credit scores. If you ask them to, the credit bureaus are also required to share the correction with all creditors or employers who pulled your credit report in the previous six months.

Learn more: How Credit Report Disputes Affect Your Credit

What to Do if You Can't Get a Late Payment Removed

If your disputes don't result in the removal of the late payment, here are actions you can take:

1. Dispute again with new information. You have the right to submit another dispute with additional documentation that you didn't have the first time around. But only do so if you have legitimately new and useful information to share; otherwise, the second dispute could be considered "frivolous" or "irrelevant" and lead the credit bureaus to end the investigation. If that happens, the credit bureaus must let you know and share the reason why.
2. Include a statement of dispute on your credit report. Add a notation to your credit report stating that you have disputed the accuracy of the information, even if the credit bureaus and creditor do not remove it. You can request this during the dispute process with each credit bureau, and you can also ask the bureaus to share your statement of dispute with creditors who recently viewed your credit report—potentially for a fee.
3. Work on improving your credit score. If the late payment is accurate and won't be removed, take the steps outlined below to help your score bounce back.

How to Improve Your Credit Score After a Late Payment

Even if a late payment stays on your report for the required seven years, it will impact your credit scores less as time passes and you practice healthy credit habits. There are many ways to continue to strengthen your credit:

• Make all payments on time. On-time payments are the most important credit scoring factor, and account for 35% of your FICO^® Score^Θ. If possible, sign up for alerts that tell you when a payment is due, or set up autopay so that you pay every credit card or loan bill on time automatically every month.
• Keep your credit card balances as low as possible. Your credit utilization rate is the second most important factor in your FICO^® Score. The less of your available credit you use, the better—those with the highest credit scores typically use less than 10% of their total credit limit at any time.
• Keep credit card accounts active. Making small purchases and paying them off in full at the end of each billing cycle shows lenders you know how to manage credit responsibly. Keep your oldest credit card open to allow your length of credit history to grow, which makes up 15% of your FICO^® Score.
• Check your credit scores regularly. There are many free ways to access your credit score, including free access to your FICO^® Score from Experian and programs available through your credit card issuers or lenders. Your credit score will come with a list of risk factors that are currently impacting it the most. Improving on these factors could help your scores increase.
• Get credit for other monthly bills. You can add eligible utility, cellphone, insurance, rent and streaming service payments to your Experian credit report with Experian Boost^®ø. This free feature allows you to add positive payment history to your Experian credit report, which could boost your credit scores powered by Experian data.

The Bottom Line

It is worth the effort to correct an inaccurately reported late payment, even if it takes multiple interactions with your creditor and the credit bureaus over a longer period than you'd like. Once the issue is resolved, take steps to avoid mishaps in the future by opting for credit card autopay and other automatic bill payments, and checking your bank accounts regularly to make sure all payments get posted as you planned.