Maintaining a good credit score is an important aspect of your financial well-being. Credit scores will determine your ability to get loans and insurance policies at favorable rates, and can even impact your chances of landing a new job. Late payments to your creditors are reported to the credit agencies and may have a significant impact on your credit scores.
When Are Late Payments Reported?
Most late payments will not be reported to any of the three major credit reporting agencies until the payment is more than 30 days past due. The credit reporting agencies also keep track of payments that are 60, 90 and 120 days past due. The longer you delay in making the payment, the more will be the impact on your credit score.
Effects of Late Payments
Any late payment reported to the credit reporting agencies will remain on the report for seven years. One late payment will not necessarily destroy a credit score. The more recent the late payment, the more impact it will have on the overall scores. Having frequent late payments or having severely delinquent accounts (90 days or more past due) will have a highly negative impact on credit scores.
Obtaining Your Credit Report
According to the Fair Credit Reporting Act, the three major credit reporting agencies allow consumers to gain free access to their credit reports once every 12 months. Consumers should take advantage of this to review the report's accuracy. The free credit report describes the payment history for each account held for the consumer but does not provide the credit scores themselves. The scores may be purchased, however, when you obtain the report.
Disputing Errors
In some cases, late payments may have been erroneously reported. To dispute a late payment, gather proof that the payment in question was made on time. This proof may include canceled checks, receipts or other documents. Provide copies of the proof--not the originals--to each credit reporting agency together with a letter detailing the items that are being disputed. The credit reporting agencies will complete an investigation and must provide feedback from the finding within 30 days. If the investigation is unsuccessful in removing the error, contact the creditor directly and provide them with the proof in an effort to remove the erroneous information from the credit report. As a last resort, contact consumer credit agencies in your state or local government.
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