Inaccurate Late Credit Reporting – Why it Happens and How to Handle It.
My firm spends hours each week looking over consumers’ claims of inaccurate credit reporting. Probably the most common claim of inaccurate credit reporting involves inaccurately reported “late pays”, where a creditor is reporting that a consumer is late on payments when he or she is not.
Here are the things you need to know about inaccurate late pays:
- The credit bureaus and creditors have algorithms (pre-set computerized functions) to record and report six, sometimes seven, instances of late pays: 30 days late, 60 days late, 90 days late, 120 days late, 150 days late and, sometimes, 180 days late. After that, the creditor and credit bureau by law is supposed to report the account as “charged off,” meaning that the debt has been charged off to profit and loss by the bank or creditor. “Charged off” does not mean that the debt has been forgiven; it means that the bank recorded it as a loss on its books. Banks and creditors will still try to collect “charged off” accounts and/or will sell them to debt collectors.
- If the deadline for your payment is, say, June 1, the bank or creditor cannot report you as “30 days late” until, in fact, your payment is 30 days late. So if you make your payment on June 29, you may incur a late charge from the bank, but the bank cannot report you as 30 days late on your credit report. However, if you do not make your payment until July 2, then the bank is within its rights to report you as 30 days late.
- “Check is in the mail”??? If you mail out your check on the last possible day for payment and it arrives at the bank after the expiration of the 30 day period, the bank is most likely within its rights to report you as 30 days late. Remember that the US Postal Service will normally take a few days to get it to the bank, then it has to be sorted, then the check has to be presented to your bank and cleared, etc. If you are near the 30-day deadline, it is better for you to make a payment at a branch or, at least, send your check overnight. Many banks, as a courtesy, will not report you as 30 days late if your envelope with the payment is postmarked within the 30-day period, but it’s better not to risk it.
- It sometimes occurs that a bank will report a consumer as 30 days late when it receives the check on the last possible day. Frequently a phone call to the bank will remove the 30-day late credit mark, but sometimes it won’t. If this happens to you and you speak with the bank and they agree to remove the 30-day late mark from your credit, be sure to get this in writing from the bank. Normally the credit employees are low-level employees working in a boiler room environment, and the employee you speak with on Tuesday may not even be working at the bank on Thursday. If someone from the bank promises to cleanse your credit of a 30-day late derogatory, make sure that the employee sends you a confirming email or, if he or she will not, send your own confirming email to them.
- Even a single 30-day late can drop your credit score by 100 points or more, so you do not want these on your credit report. If you have a false 30-day late on your credit report, dispute it with the bureaus and with the creditor, via certified mail. Include any documentation demonstrating that the derogatory mark is false. If this does not resolve the dispute, then you may wish to consult with an attorney that specializes in cases under the Fair Credit Reporting Act.
I hope this short article has been useful to you