Late payments are the main thing that impacts your credit score. This can have big repercussions on how easy it is for you to get loans later in life. Let’s not forget that late payments can also incur hefty fines. Fortunately, though, there are some things you can do to help yourself. After all, mistakes and bad things happen in life that can make payments difficult. One approach that can help is a pay for delete letter. However, you can also follow other processes to remove late payments from your credit report.
Table of Contents
What Affects your Credit Report?
- Late payments
- Overused credit cards
- History of loans
First, it’s worth understanding what drives low credit scores. Clearly, late payments are a big factor but so is credit utilization. This last one is perhaps less well known and basically, means how much of your debt you use. For example, are your credit cards almost maxed out? Furthermore, if you’ve been in debt for years will have an impact versus someone new to debt. This one can act in your favor installments though if you’re an exemplary debtor with everything always paid on time.
Strategies for Removing Late Payments
Before we go into the details of the pay for delete letter approach, let’s review some of the other strategies you can follow:
- Communicate to your lender
- Send a goodwill letter
- Dispute incorrect delays
- What is a pay for delete letter?
Communicate to your Lender
This might sound strange but, believe it or not, lenders are people too. Depending on who your lender is, you could try picking up the phone and asking them to remove the late payment information from your credit report. Unsurprisingly, banks and credit cards would probably be unlikely to help. Alternatively, perhaps a store or broadband provider might waive your payment delays? You never know until you ask. There’s also nothing stopping you from negotiating this by offering, for example, to sign up for automatic payments. Businesses tend to like those.
Goodwill Letter
A goodwill letter is an extension of the above point. If you have a good relationship and strong history with your creditor then they might consider giving you some goodwill. They might especially be willing if you’ve recently suffered a personal tragedy or other hardship. We are all human and we forget things at times, including payments. You can find sample letters online to help you get started.
Dispute Misinformation
Essentially, any mistakes on your credit report can be disputed. The process to follow is on the Federal Trade Commission’s website. Alternatively, you can work with a credit repair company to carry out the process and disputes on your behalf.
What is a Pay for Delete Letter?
This letter serves as a platform from which to negotiate for any negative information to be removed from your credit report. You still owe the debt but you’re essentially asking for that information to not show up on your credit report. In return, you usually offer something in return such as paying several instalments in one go. As you might expect, not all creditors will want to go down this avenue although the money will tempt some. In fact, it seems that the credit bureaus themselves don’t advocate this approach because there is no guarantee although it is completely legal. In some cases though, it might be worth a shot and a credit repair company can advise you accordingly.
Does the Pay for Delete Letter Approach Work?
Consider that of the three bureaus, Equifax and Experian don’t mention the pay for delete letter approach. TransUnion does have an interesting article referencing the fact that deleting negative data might improve credit scores in the short term. Regardless though, it seems that credit approvals still decline. Perhaps it’s like the web in the sense that once information has been published, you can never really completely remove it if it’s correct. You could therefore be going down a torturous route for very little benefit.
On the other hand, the same article references research that shows how adding positive data to your credit report can be a huge help. In fact, TransUnion seems to back this approach and quotes one model where credit approvals improved by 21%. If you take all this into account then it’s not just about focusing on the negative on your credit report. In fact, you should also consider the positives and how to leverage those.
Final Thoughts on Removing Late Payments from your Credit Report
Naturally, it’s important to check your credit report and fix any mistakes. There’s also nothing wrong with trying to collaborate with your lenders to improve your credit report. However, you should also consider the big picture and how to rebuild your credit. Otherwise, you might find yourself back at the starting point more often than you would want to. Working with a credit repair company can help advise you on the best strategy for improving your credit score moving forwards. They can also help you focus on the positives whilst accepting the negatives as mistakes from which you can learn. Either way, it’s an overwhelming time so don’t do it alone and make sure you plan for the future and avoid being controlled by debt ever again.