As obvious as this subject may seem, there are some not so obvious things that we need to discuss. Every year there are thousands of people that believe if they pay a few days late, they will be reported late to the credit bureaus. If this were true, most people’s credit reports would be overflowing with negative information. Since there are millions of people that don’t understand what I am going to talk about, I am not going to insult them by saying that they should exercise some common sense.
First of all, creditors are not required by law to report to the credit bureaus. Almost most mortgages holders, car lenders, credit card issuers will automatically report late payments to the credit bureaus. There are creditors like doctors, landlords, utility companies and municipalities that do or do not report to the credit bureaus. Because you do not want to gamble on whether they will or won’t, you should assume that they do.
Late payments for accounts that are not in collections are reported as late when the creditor does not receive a payment thirty days after the due date. Although most people know this, they don’t know what I am about to say about late payments. Are you ready? Fasten your seat belts. The credit scoring system divides late payments up into three categories. The first one is late payments for the past year. The second one is late payments from a year to two years. The third category are late payments that are from two years and beyond.
When I used to work as a supervisor in a bank in the credit card department, this was how we would unofficially look at credit reports. Now consider this next statement. Every year there are literally thousands of people that are 30 days late on a credit card only one time. They never ask if a late payment can be removed from their credit reports. If you have only been late once in a twelve month period, most creditors will not only remove the late payment and report the account as paid as agreed but they will also refund the late fee. Get ready for the catch in part 2.