How To Correct A Late Payment Record On Your Credit Report?

A perfect credit report is hard to achieve and much harder to maintain! However, it is essential that you take all steps to keep your credit score and credit report healthy. Only with a good credit score can you get the best credit, be it loans or credit cards. 

Many factors are considered to prepare your credit score. If you are low on even a single parameter, it has an adverse effect on your credit score. However, there are options to rectify your credit report in case you have some unfavourable items in them. 

Why does my credit score matter? 

Your credit score, a 3-digit number, indicates your creditworthiness. When you apply for a loan or a credit card, this is the first thing that lenders look into. It helps them decide whether or not the borrower will repay the loan amount on time. Hence, maintaining a good credit score is critical. By making all your payments on time, checking your credit reports regularly, paying off existing balances on your credit cards and maintaining your credit usage below 30%, you can maintain a healthy credit score.

What is a Late Payment Record on my Credit Report?

You might have forgotten to pay your credit card bill or an EMI payment on time. The result? The late payment is noted on your credit report. Having a late payment record on your credit score is not healthy. It stays in your credit report for up to seven years and adversely affects your credit score. And we all know what it means to have a bad credit score. While it hampers your eligibility for loans and credit cards, in the long run, it doesn’t allow you to get the best interest rates, discounts and other benefits on your loans or credit. 

Can I get the Late Payment Record removed from my Credit Report?

As mentioned earlier, late payment records do have an adverse effect on your credit report. Whether it was willful or by error, it does reduce your credit score to some extent. Now, if it was an incorrect entry, you can easily get it rectified with the lender. But, if it was a correct entry, the chances of removing it are lower. 

Follow one of the below approaches to remove a late payment record from your credit report

The Goodwill Letter

If you missed a payment or have genuine reasons for your late payment, you can approach the lender and request them to strike off that late payment record from your credit report. If you have a good credit standing with the lender and a long time relationship with them, the lender may agree to remove the record. This is called a ‘goodwill adjustment’ and solely depends on the discretion of the lender. 

Make some additional payment against your outstanding credit

If possible, you can make a partial payment or clear the entire outstanding due amount on the loan. You can do this in consultation with your lender. This may nudge them to provide you with the ‘goodwill adjustment’ required to remove the late payment record against your credit report. 

Set up ‘auto-debit’ facility for your EMI payments

You may also agree to set up an auto-debit facility for your EMI payments, assuring the lender that you are committed to repaying the loan amount on time from now on. This kind of assurance may boost the lender’s confidence in you and they may agree to remove the late payment record from your credit report. 

What are some ways to avoid getting a late payment record on my credit report?

Making payments on time! This may sound like an obvious solution, but this is the best solution to keep your credit report clean. The credit report is a crucial document that indicates your overall financial status. It’s critical to get credit on the best terms. So it is natural that you keep it on the right track. Here are some ways to maintain a healthy credit report without any late payment record; 

  1. Make payments on time every month – You can achieve this by simple methods like setting auto-debit or standing instructions on your bank account. This way, you don’t miss any payments and no need to worry about any late payment record on your credit report. You can even use a simple excel sheet to keep track of all the required payments every month. 
  2. Check your credit report regularly – It so happens sometimes that the lender may send incorrect details to the credit bureau resulting in an incorrect late payment record on your report. That is why it is important that you check your credit report regularly. So that, if you find an incorrect record, you can immediately dispute it with the respective credit bureau and get it removed or rectified on your credit report. One can get their credit report from one of the 4 credit bureaus in India, namely – TransUnion CIBIL, Equifax, Experian and CRIF Highmark.
  3. Check and see how long the late payment record has been on your credit report – Generally, a late payment record stays in your report for 7 years. If you see that it has been past 7 years and the record has not yet been deleted, you can contact the credit bureau and get it removed. 

The Bottom Line

We have established the importance of a healthy credit score. A single late payment record can cause significant damage to your credit score. As they say, prevention is always better than cure. You can avoid the hassles of getting a late payment removed from your credit report, by avoiding it in the first place. 

Be mindful of your credit report and the various components on it, so that you can take the necessary steps to keep it healthy. Finally, maintain a good relationship with your lender so that you can be well informed and avoid detrimental information from entering your credit report.