The Better Credit Blog

Hi -

I have several credit cards in varying stages of delinquency. How far behind does one typically have to  fall, before a creditor is ready to accept a reduced settlement? And when do creditors typically give up and send the account to a collection agency?

In my experience, credit card companies usually do not accept a settlement before the account has been handed over to a collection agency. This is particularly true for credit card companies. However, with that said, it’s not a bad idea to ask them if they’d be willing to work something out. Your number one goal ought to be to keep these accounts out of collections. Dealing with collection agencies is not a pleasant experience. Plus, you run the real risk of adding yet another bad entry on your credit report. Basically, creditors can send the account to collections whenever they see fit. I would, however, expect to see the account go to collections after it has been between 120 days and 150 days late.

Hope this helps,
Ryan

Dear Ryan
I have 2 paid off installment accounts that have past due in late 2007. should i try to remove those 2 and how do i go about it? or should i leave them on the report.
Thanks for your time and help
-name removed

Hi name removed -
Assuming these accounts have an overall good payment history, I would try to remove the late payments on both accounts by sending the original creditor a “goodwill” letter kindly asking them to remove the late payments. Goodwill letters are highly specific to your individual situation, but I suggest taking a look at my sample goodwill letter.

Also, read this article I wrote a few months back on the same subject.

Best,
Ryan

Well, I messed up last month and accidentally forgot to pay one of my credit cards. It was reported on my credit and I saw a 30 point drop! Yes, late payments can be a very big deal, and they weigh significantly in your overall credit score calculation. Get your free credit score here.

Although this has happened to me before, it was several years ago (before I really paid much attention to my credit score, or even knew I could get it removed). I am sure many of my readers have made the same mistake, so I’d like to show you 3 ways to get a late payment removed from your credit report. Just in case you’re wondering, I was able to get this late payment entry removed from my credit report by mailing the original creditor this goodwill letter.

In my experience, as long as you don’t have several late payments on the same account, it’s really not that difficult to get them removed. Here are three methods you can use to get them removed.

1. Request a Goodwill Adjustment from the original creditor to remove the late payment

The idea is simple and it works incredible well. Many times creditors are happy to grant “goodwill adjustments” if your previous payment history is relatively good and you have established a good relationship with the creditor. This is probably the easiest and surest way to get a late payment removed from your credit report. I wrote a whole article describing how to do this. You can also use this sample goodwill letter I created

2. Negotiate removal by offering to sign up for automatic payments.

I have never actually tried this method myself, but from what I understand creditors frequently offer to remove late payment entries if you, in exchange, agree to sign up for automatic payments. I really like this idea because it works out well for both parties: the creditor can ensure future payments will be made on time, and you don’t have to ever worry about missing another payment. I would love to hear from those of you who have succeeded with this method!

3. Dispute the late payment as inaccurate

Sometimes creditors have a difficult time verifying the exact details of your account history. Therefore, if you dispute the late payment and they are unable (or simply don’t bother) to verify it, the negative entry will be removed.

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