Can Credit Repair Companies Remove Late Payments?

A late payment occurs when a borrower fails to make a scheduled payment on a debt by its due date. This applies to various financial obligations, including credit cards, loans, and mortgages. While a few days’ delay might only result in late fees, payments significantly past due can negatively impact an individual’s credit standing. Such delinquencies signal potential risk to lenders, affecting a consumer’s credit score. A lower credit score can impede access to future credit, influence interest rates, and affect housing applications or insurance premiums. Understanding late payment repercussions is important for managing personal finances effectively.

Understanding Late Payments on Your Credit Report

Creditors generally report a payment as late to the major credit bureaus—Experian, Equifax, and TransUnion—once it is at least 30 days past its due date. The severity of reported delinquency increases with time, categorized as 30, 60, 90, 120, 150, or 180+ days late. These reported late payments can significantly lower a credit score, as payment history is a primary factor in credit scoring models, often accounting for approximately 35% of a FICO Score. The impact can be substantial for those with an otherwise excellent credit history. A single 30-day late payment can cause a notable drop in score, and the effect intensifies with longer delinquencies or multiple occurrences.

Accurate late payments remain on a credit report for up to seven years from the original delinquency date. Even if the overdue balance is paid, the late payment record persists. While the negative impact on a credit score lessens over time, as the record ages and new, positive payment history is established, its presence can still influence lending decisions.

The Role of Credit Repair Companies in Disputing Information

Credit repair companies primarily dispute information on a consumer’s credit report that appears inaccurate or unverifiable. Their operational framework is rooted in the Fair Credit Reporting Act (FCRA). This federal law mandates that credit bureaus and information furnishers conduct reasonable investigations into disputed information.

These companies obtain client credit reports from all three major bureaus. They then analyze these reports to identify items that could be challenged, including late payments. Following this review, they prepare and send dispute letters to the credit bureaus and sometimes directly to the creditors.

The core limitation of credit repair companies is that they cannot legally remove accurate and verifiable late payments from a credit report. Their services are confined to challenging entries that are demonstrably incorrect, incomplete, or cannot be substantiated by the creditor or credit bureau during an investigation. The success of their efforts hinges on the reporting entity’s inability to verify the disputed information within the mandated timeframe, generally around 30 days.

What Can Be Removed and What Cannot

Only specific types of late payment entries can be successfully disputed and potentially removed from a credit report. Inaccurate late payments are eligible for removal, such as instances where the reported payment date is incorrect, the amount is wrong, or a payment was reported as late when it was actually made on time. Duplicate entries of the same late payment can also be challenged.

Unverifiable late payments are also removable. If a creditor or credit bureau cannot verify the accuracy of a late payment entry within the investigation period mandated by the FCRA, it must be removed. Late payments resulting from identity theft or fraudulent activity can be disputed and removed, as these are not legitimate debts incurred by the consumer.

Conversely, accurate and verifiable late payments cannot be removed from a credit report, regardless of how negatively they impact a credit score. If a consumer genuinely made a payment past the due date and the creditor accurately reported this information, it is legally permissible for that entry to remain on the credit report for up to seven years. Attempting to remove accurate information through fraudulent means is illegal and can carry severe penalties.

Consumer Actions for Addressing Late Payments

Consumers can proactively address inaccurate late payments by obtaining their credit reports from AnnualCreditReport.com, which provides free reports annually from each of the three major credit bureaus. Upon reviewing the reports for errors, any inaccurate late payments can be disputed directly with the credit bureau reporting the mistake. This can often be done online, by mail, or by phone.

When disputing, consumers should gather supporting documentation, such as bank statements or payment confirmations, to prove the payment was made on time or that the information is incorrect. The credit bureau generally has 30 days to investigate the claim. If the information is found to be inaccurate or cannot be verified, it must be corrected or removed from the report. Consumers can also directly contact the creditor that reported the inaccurate information.

For late payments that are accurate, consumers have limited options but can consider sending a “goodwill letter” to the creditor. This letter explains the reason for the late payment, expresses remorse, and politely requests its removal as a gesture of goodwill, especially if there’s an otherwise strong payment history. While creditors are not obligated to grant such requests, they may consider it for isolated incidents or long-standing customers.

Beyond addressing specific late payments, improving overall credit health involves consistent on-time payments for all accounts. Setting up automatic payments and payment reminders can help prevent future delinquencies. Reducing revolving debt and maintaining low credit utilization, ideally below 30% of available credit, also contribute to a healthier credit score over time.