Can I fix late card payment damage after autopay fail?

To Her Credit with Sally Herigstad

Sally Herigstad is a certified public accountant and the author of “Help! I Can't Pay My Bills: Surviving a Financial Crisis.” She writes “To Her Credit,” a weekly reader Q&A column about issues involving women and credit, for CreditCards.com. She also has written for MSN Money and Bankrate.com, and has guested on Martha Stewart Radio and other programs.

Ask Sally a question, or see if your question has already been answered in the To Her Credit answer archive.

Discover canceled my autopayment, which resulted in a 30-day late payment mark on my credit report. How can I get that removed?

Any bill-paying snafu, such as autopay being canceled or not working, regardless of whose fault it is, carries the same weight as if you couldn’t or didn’t feel like paying your bills this month.

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Dear Opening Credits,
I had been a Discover card customer for over 20 years. Nearly every bill I have is autopaid, including all credit cards.

Recently, Discover canceled autopay on one of my cards (they say they mailed notices), resulting in a 30-day missed payment. As a result, my 790 score dropped to 698. Discover refunded the late fee, but they are refusing to correct my credit reports. Do I have any recourse? – Dani

Dear Dani,
As you discovered, banks typically do not remove information about late payments, regardless of the cause. I had six outgoing checks stolen from my mailbox about 20 years ago, and ended up with several negative marks on my credit report as a result.

The banks were not swayed by my “someone stole my payments” story, and I had no way to prove it. Even if I could have proven it, the payments were actually late, and it didn’t seem to matter why. I just had to wait for the negative marks to age off my credit reports. (I haven’t put outgoing checks in my mailbox since, either!)

One problem with credit reports, in my opinion, is that any bill-paying snafu, such as autopay being canceled or not working, regardless of whose fault it is, carries the same weight as if you couldn’t or didn’t feel like paying your bills this month.

Another frustrating thing is how far a perfect score can fall with just one negative mark. A person who has been an excellent credit risk for 20 years, faithfully paying all bills on time, does not suddenly become a bad risk just because one check got lost in the mail, or in your case, because the bank canceled the autopay that had been working all along. Yet that is how it appears under the common credit scoring systems.

Tip

Tip: Thanks to a provision of the Fair Credit Reporting Act, when something's amiss with your credit report, you have the right to add a statement to your file about it, either to dispute a mistake or to explain your personal financial debacle. The Big Three credit bureaus limit you to 100 words a pop, but both Experian and TransUnion allow you to add multiple statements to your report; Equifax draws the line at one statement on your credit report at a time.

When you put these two things together – a negative mark for an error that may not even be the payer’s fault, and severe downgrading of one’s credit score for just one mark – the system can seem unreasonable.

Regardless of what we think about how credit scoring works currently, however, all we can do is work with it to try to minimize any damage.

Add a letter of explanation to your credit file

You have already taken the important first step by contacting your bank. At least you got your late fee refunded.

Next, if you have not already done so, you can send a dispute letter to one credit reporting company. You can start with the sample letter provided by the Federal Trade Commission. Send the letter by certified mail, return receipt requested. The credit reporting company must investigate, generally within 30 days, and then send you the results in writing.

Sending a dispute letter to the credit reporting company probably will not change your credit report when a payment was actually late, regardless of whose fault it was. However, you can ask the reporting company to include the statement of dispute with your file. For a fee, you can even ask them to send it to anyone who received a copy of your credit report recently.

Another way to mitigate the damage if you expect to apply for credit or a loan soon, is to attach a 100-word statement to your credit report, explaining why the payment was late. The statement will not affect your score, but a bank or underwriter can see the note and your explanation of what happened.

After you’ve done what you can to deal with the fallout from this snafu, it’s time to relax and focus on other things. Don’t take your temporarily lower score personally, and don’t dwell on it too much. In time, the truth about how you live a financially responsible life will win, and this frustrating negative mark on your credit report will be long forgotten.

See related: How quickly will my score recover from a late payment?, One late card payment: What's the damage


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Updated: 08-18-2018