A late card payment stays on your credit report for seven years, even if you ultimately pay off the balance and close the account. But the negative impact will diminish over time, and there are other steps you can take to improve your score in the meantime.
Dear Keeping Score,My oldest credit card has three late payments that won’t be falling off soon. If I close the account (that is paid off) will the late payments fall off too? – Janine
Don’t you, and about a zillion other people, wish?
When I was in third grade, Sister Mary Assunta told me that if I was good I might be forgiven for all the naughty things I was (falsely) accused of. But regardless, I would still have to spend some time in purgatory. While the records the bureaus keep are not in the same league with Sister Assunta’s, you will have to serve your time nevertheless.
So, the answer to your question is alas – late payments are going to stay on your credit reports for seven long years and it won’t matter if you close the account, move to a desert island or pay a credit repair company to erase your past sins. There is no way to remove timely and accurate negative information from your credit report, no matter what.
Having said “timely and accurate,” let’s take a closer look at what this means. Timely in credit reporting is seven years for garden variety derogatory remarks (e.g. late payments) and up to 10 years for a bankruptcy, depending on which chapter the filing is made under.
So, your late payments will be with you for seven years from the date of the delinquency. In some cases, if you appeal to the lender you’ve offended with your lateness, they may retract the late payment report in return for a quick payment and a good excuse. If your missed payments are farther in your past, you can try to get a sympathetic ear at customer service, but the longer the time-lapse from offense to request, the slimmer the chance of a reversal.
Accurate reporting means that any negative entry on your credit report has to be yours. With billions of pieces of data hitting millions of credit reports daily, it is inevitable that some items will end up on the wrong file. You can dispute the negative items with the bureau and if they can’t or won’t be verified by the creditor, the bureau will remove the late notation.
Beware of closing an old account
The bottom line is that paying your bills on time, each and every time, is the very best way to achieve and keep a good credit score. That’s because your payment history counts for a whopping 35 percent of your FICO score; it’s even higher for VantageScore, at 40 percent.
The only way to max out this category is with time and consistent good payment behavior. For those of my readers not familiar with VantageScore, it is a credit score that was developed in conjunction with the three credit bureaus. It uses the same 300 to 850 scale as FICO does and is reputed to be at least as accurate. Being the new guy on the block, not all lenders use the VantageScore.
I am a little alarmed that your oldest credit card is the one you are considering closing. While credit history – not to be confused with payment history – is not nearly as important to your score, it counts for 10 percent in FICO’s formula. VantageScore combines this portion with credit mix (which is another 10 percent to FICO) and counts it at 21 percent.
Making the decision to close an account, especially an old account, should be as carefully considered as taking on new credit. There are of course good reasons to close accounts, even old ones. But you need to weigh the risks and benefits of doing so and make an informed decision.
I also know that seven years sounds like a long time. However, if you use this time to do the right things when it comes to your credit you will find that those late payments will mean less and less to your score as time goes by.
Doing the right things start with what I said in the beginning – pay your bills on time, every time. Keep your credit card balances low (less than 25 percent of your credit limit), since credit utilization is second only to payment history in importance.
See related: How late payments get reported to credit bureaus
You can boost your score, despite your lingering late payments
There are a few other things you can do in the meantime that could bolster your score. You will want to be careful about opening any new credit, as I said before. Only open credit when you need it and only after you have looked at all of your options.
Passbook loans are a good way to add to your credit mix and can help your score without putting yourself in debt, since you are essentially borrowing from yourself. Just be sure that the bank or credit union reports your account to the credit bureaus.
If you are planning to apply for any new credit or loans and think you may come up short in the scoring department, you might check out the new Experian Boost or UltraFICO programs.
These are free programs that access your banking information to look at things like utility payments (in the case of Experian Boost) or good financial behavior like savings (UltraFICO). You can opt in or out of both at any time, but be aware that for now they will only have an effect on your Experian report.
The most important thing of all is to have patience and keep doing the right things. As I said, you will find that in time those late payments will mean less and less to your score if you can stay the good credit habits course.
Remember to keep track of your score!