Late payments are no joke when it comes to credit scores. A single late payment can drop a good credit score by as much as 100 points. That’s because the higher your credit score, the lower it will drop if you make a late payment.
The COVID-19 pandemic has a wide-ranging impact not only to your health but to your livelihood and financial well-being. Many banks offered to waive late fees as well as offer payment deferrals back in April 2020 when there was less data about COVID-19. But you may not have needed payment deferral at that time.
Fast-forward 7 months into the pandemic, people are finding themselves forced to miss credit card payments in favor of basic needs like rent, food, and transportation. Tens of millions of consumers will have their credit reports impacted and scores plummet due to missed payments resulting from the COVID-19 pandemic.
It is important to engage everything in your credit fix tool-kit to get late payments removed.
Credit reporting provisions under the CARES Act
The CARES Act has a credit reporting provision to treat consumers who are working on forbearance or a payment plan as current but it’s essentially meaningless. The legislation does not suspend debt collection efforts or negative credit reporting efforts by the major credit reporting bureaus – Equifax, Experian and TransUnion. Sidenote: Get weekly free credit reports due to COVID19 through April 2021.
4 Strategies to remove late payments due to COVID-19
1. Reach out to the creditor. Creditors can remove anything they report to the credit bureaus. Never let them tell you they cannot. Request creditors remove late payments from your credit report if it was incurred due to the coronavirus pandemic. Stress to the representative that your state or city had a ‘shelter in place,’ at the time you missed payments or that you were quarantining yourself due to COVID19 symptoms.
Proof of loss of income or health complications will help your case if you can provide it. Your creditor may offer to waive late fees/penalty but that is not the same as removing late payments. Hopefully, they will offer both late payment removal and waive late fees. Don't be afraid to ask creditors for help if COVID19 has limited your ability to make payments.
2. Request a retroactive deferment plan. Creditors that offered payment deferral plans or hardship programs may be able to backdate a payment deferment for you so that there was no payment due the prior months. Some major banks are offering deferments for 30-90 days, without your score being impacted.
3. Speak directly to the resolutions department. Most issuers have set up dedicated webpages detailing coronavirus response efforts. But if you can also Google the “creditor name” along with “executive resolutions department” or “creditor name” along with “office of the CEO.” Many creditors have high-level decision-makers or a customer resolutions department that you can email or call. People in high-level departments can often make decisions the representative in a call-center cannot.
In the case where you cannot reach someone in a high-level position, send a handwritten letter via overnight mail explaining why you should get a missed payment removed. Be sure to include your phone number and email. Chances are very high that you’ll get a response back.
4. File a CFPB complaint against the creditor. The Consumer Financial Protection Bureau (CFPB) will seek a resolution when you submit a complaint against a creditor. Their website www.consumerfinance.gov has a simple online complaint portal where you can do the following:
- State how you reached out to a creditor to remove late payments
- State the creditor’s response
- State what resolution you seek.
Once you file this complaint, the CFPB forwards the complaint to the creditor, who’ll be required to respond back in about 15 days with a resolution.
4. Hire a professional. Two of the most successful credit repair companies, Lexington Law and Creditrepair.com are experienced with dealing with credit bureaus as well as directly with creditors. Lexington Law was founded in Salt Lake City, Utah in 1991, Lexington Law is a real law firm that now serves customers in all 50 states. You can get three tiers of services at Lexington Law:
- Concord Standard: Basic credit repair package costing $89.95 per month. Lexington will contact the credit bureaus and your creditors to try to get negative items removed.
- Concord Premier: Intermediate service level costing $109.95 per month. In addition to the services you receive with the basic package, you also receive additional services like TransUnion alerts and score analysis.
- PremierPlus: PremierPlus plan gives you Lexington's full menu of services for $129.95 per month. With this package, you receive all the services included in the basic and intermediate plans, plus extras like identity theft protection, credit score monitoring, and personal finance tools designed to help you manage your money more efficiently.
CreditRepair.com is based in Seattle, WA. The company was founded in 1997 and offers credit repair services to clients in 50 states (and Washington, DC). The company charges a monthly fee of $99.95 plus a one-time setup fee of $14.99. CreditRepair.com's services include the following:
- In-house licensed legal staff knowledgeable about federal credit reporting laws.
- Dispute services for negative items, such as late payments, collections, charge-offs, and bankruptcies, on their credit reports.
- Credit-monitoring and identity theft protection.
- Educational tools that help consumers improve their credit scores.
- Credit score updates.
- Fraud alerts.
- Cancel anytime.