Yes, it’s nice not to have worry about late payments when you set up automatic bill pay, but sometimes things can go really wrong if you don’t pay attention
Dear To Her Credit,
I’m retired and travel overseas continuously. My bank pays my bills online. In April 2011, my bank sent a payment to the credit card company, but the post office returned it to me. I was out of the country. Then began my monthly, no-payment letters, and then monthly late fees, and then blocking the credit card. After many calls to the bank, finally a VP agreed to remove the late fees, so that’s taken care of.
The problem now is that my credit score has plummeted. It was in the 700s in January 2011. I got a letter after being denied a credit request saying my score was in the 100s. What can I do, if anything? — Sarah
Your story illustrates one problem with putting our financial lives on autopilot. Not long ago, we wrote checks to each of our creditors. If we didn’t get a bill, we probably noticed. Now, we set things up electronically and assume it’s all taken care of — and it may be, for months or years. Until, for one reason or another, something goes wrong!
While I’m not advocating that we go back to check writing and snail mail, paying bills online still requires that you check your statements every month — ditigally or on paper — to keep track of your balances and payments, not to mention possible fraudulent use of your credit. Too many things can go wrong without some oversight on your part: due dates or minimum payment amounts may change, payments may not go through, interest rates may rise or your account can get hacked.
Something’s fishy about being told your credit score is in the 100s, however. A FICO score under 600 is very low. A score in the 300s is almost impossibly low. Either they are using a different scoring system, or they are in error.
By calling the bank and having the late fees removed, you’ve done the hardest work fixing the problem. Now you just need to take it one step further and clean up your credit report.
Your first step is to find out exactly what is on those credit reports. The company that denied you credit must tell you which reporting bureau gave you information. If you request a report within 60 days of being turned down for credit, you are entitled to get it for free. I would also encourage you to pull your actual FICO score from myFICO.com, which costs about $20.
You can also get a free annual credit report from each of the three reporting bureaus by going to AnnualCreditReport.com. You can fill out the form online or call 877-322-8228. Do not contact the three nationwide consumer reporting companies individually, and do not go to any other “free” credit reporting website that asks for your credit card number. The three reporting companies only provide free annual credit reports through this Annual Credit Report Request Service.
You can ask for reports from all three companies or from only one at a time. By getting only one report at a time, you could feasibly check your report every four months for free. However, because you’ve had a problem, I’d ask for reports from all three companies. They may not have exactly the same information. In fact, you may be surprised at everything on your reports after you have problems with both mail and with online bill paying.
If you request your credit report online, you should be able to see the results immediately.
Next, make sure the credit bureaus report your corrected information. Just because you’ve had late fees removed, don’t assume your reports are taken care of. Jeanne Brutman, a New York City financial planner, says, “She needs to submit a letter from her bank, stating their error and how they withdrew all the late charges for their bank error.”
Send the letters to the three credit bureaus at:
- Equifax, P.O. Box 740241, Atlanta, GA 30374-0241; 800-685-1111
- Experian , P.O. Box 2002, Allen, TX 75013; 888397-3742
- TransUnion, P.O. Box 1000, Chester, PA 19022; 800-916-8800
Repeat the process for other negative marks on your report. “This also needs to be done to every company that did not receive payments on time and reported her. She will need their letters as well, to send to the credit reports to correct the reports.” Remember, however, only inaccurate information can be corrected on your credit report. Instances where your bank forgave you late payments or fees can be fixed, but if the lender refuses to forgive you for a late payment, for example, that notation cannot be removed from your credit report.
If the credit bureaus change your reports based on the letters you send, you are entitled by law to yet another copy of your credit report reflecting the changes.
Cleaning up this mess won’t be easy. Brutman expects it to take several months of diligent effort. One wonders how much time all our automated personal finance methods really save us, if it results in such a chore after things go awry!
The sooner you straighten this out the better. Take good care of your credit — you never know when you’ll need it!