Reader’s Question

Dear Ashley,
I have a department store credit card I use occasionally. I had signed up for electronic statements which I was receiving with no issues for over a year. In April, I started getting phone calls with no messages for several days – always on my home phone while I was a work. By chance, I did a reverse phone lookup and found out it was Kohl’s collections. I called Kohl’s and found out I was near 90 days past due on a $19.23 balance that was due in February. I had not received ANY communications from Kohl’s for over 3 months.

The last statement was the month prior to this missed statement which was paid in full. They agreed to remove the late fees and finance charges and I paid the balance in full immediately. They also said this wouldn’t show up on my credit report. Well, it’s showing as a 30 days late payment. I called Kohl’s several times, and they say they have reviewed my account and will not re-age it to fix the problem. What else can I do? I’ve had PERFECT credit for 30+ years!!! I’m certainly never receiving electronic statements ever again! Help!

My Response

Hi [name removed],
Unfortunately you have learned the hard way that collectors are filthy liars and should never be trusted. Also, because you do not have this agreement in writing, there is little you can do. You could keep bugging the hell out of them (that is, call them everyday) and you might get them to budge.

Personally, however, I would not bother with this. In the long run, this is a small mistake and will only negatively affect your credit for a couple of years. I understand that it’s annoying to have this little ding on your 30+ years of perfect credit, but unless you’re in the market to purchase a home, I would brush it off and, rather, declare it as a lesson learned –the lesson being: always get agreements between you and collectors in writing before sending them any money.

Hope this helps,
Ashley

Take Home Point

I wrote an article awhile back entitled, “3 Ways to Get a Late Payment Removed From Your Credit Report“. In this article, I stated that a hiccup (i.e., a single late payment on an account with otherwise clean history), will sometimes be simply forgiven if you ask them. However, when you are dealing with a collector, you must keep in mind that any verbal agreements mean nothing because collectors are liars. If you are attempting to negotiate a late payment, make sure that any agreements are issued in writing before you pay them. Many times they will send you a letter stating the agreement and you’ll be golden.

Reader’s Question

Dear Ashley,
I had a credit card that that the bank closed because of late payments. I know I have been paying on time and paid the credit card off 6 months later. The bank has offered to open the account again, but I am curious if this is a good or bad thing. On my report it says closed by creditor, if it is reopened will it just show opened?

My Response

Hi [name removed],
Generally, open credit card accounts look better on your credit report than closed accounts because open accounts show you have used the card responsibly –the card hasn’t been “closed by creditor“. Before doing anything, I would ask the creditor if they are going to open a new account or simply reopen the account they closed. If they are just going to open a new account, the “closed by creditor” entry on your credit report will remain and a new entry for the new account will be reported –this won’t do you any good. However, if they are actually reopening the closed account, this could possibly improve your credit because the “closed by creditor” entry will be changed to “open”. I would ask this before making a decision.

Hope this helps,
Ashley

Take Home Point

Credit card accounts marked as “open” on your credit report are generally better for your credit score than a closed account. This is due to a couple of things: First of all, an open account is building payment history. Payment history has a big impact on your credit score –the more history (positive of course), the better your score will be. Secondly, an open account indicates that you haven’t screwed up so bad that the creditor closed (or charged off) the account. Therefore, if given the opportunity, it’s wise to ask the creditors of any closed accounts on your credit report to consider reopening the account.

Reader’s Question

Hi there,
I had a bill due around May 2nd, but was not able to pay the bill until May 29th. However, the creditor reported it on my credit report as a late payment. I heard that the creditor only shows deliquencies after 30 days. Am i correct?

My Response

Hi [name removed],
Generally it is the case that creditors only report late payments that are 30+ days late. However, this is not a rule and the creditor could technically report it late at their discretion (given that the payment was indeed late). Nonetheless, I would at least give them a call and ask if they will give you a break and remove the negative entry –you might be surprised.

Hope this helps,
Ashley

Reader’s Question

I have read on a couple of websites that asking a collection agency to delete an account once your willing to pay it in full does not mean that it will happen. How do you work around that once you’ve paid it off and they do not remove it. Is it also true that paying on an account that is old refreshes the date it is reported as bad?

Response

Hi [name removed] -
Good questions. While it’s true that collection agencies are under no legal obligation to remove the account once you’ve paid it, generally the collection agencies are only concerned with one thing: getting paid. They do not care about your credit score. In most cases, if you state in writing that you will pay the account in full if they agree (in writing) to remove the collection entry from your credit report, they will comply.

The key is to get everything in writing. Collection agencies do not want to go to court anymore than you do (regardless of what they say). Therefore, if a written agreement is established (i.e., pay in full for removal), its very unlikely they will fail to remove the entry. If you don’t have everything in writing, all bets are off and they won’t take the time to remove the entry.

Regarding your last question: Although rare, resuming payment on an old account can refresh the date. However, this is no reason to put off paying on an old account –if the date is reset, in most cases it’s very easy to get this removed by simply disputing it as inaccurate.

Hope this helps,
Ashley

Reader’s Question

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?

Response

Hi there -
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,
Ashley

Reader’s Question

Dear Ashley,
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

Response

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,
Ashley

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! Late payments can be a big deal, and they weigh significantly in your overall credit score calculation.

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.

The first thing you should do is make sure you have your facts straight by getting a copy of all 3 credit reports. I use CreditReport.com to stay up-to-date on any changes on my credit report.

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. The process involves writing the creditor a letter explaining your situation (why you were late) and asking that they “forgive” the late payment and adjust your credit report accordingly. The easiest way to write a goodwill / forgiveness letter is to use the sample letter I created as a template.

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

While I certainly do not advocate fraud (that is, claiming an entry is inaccurate when you know it’s not), if you find ANY inaccuracies on the late payment entry (dates, amounts, etc), you can 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.