When an Inaccurate Late Payment Appears on Your Credit Report
Inaccurate late payments can cause serious damage to your credit. A single late payment can lower your credit score and remain on your credit report for years. That makes it especially frustrating when the late payment being reported never actually happened.
Payments can be applied to the wrong account. Automatic payments can fail because of a processing error. A lender may incorrectly report payments during an approved forbearance or payment arrangement. Sometimes a simple reporting mistake can turn years of perfect payment history into a credit report showing that you suddenly fell behind.
If a late payment on your credit report is inaccurate, you have the right to dispute the information and have it properly investigated.
How Are Late Payments Reported on Your Credit Report?
Banks, mortgage servicers, auto lenders, credit card companies, and other creditors regularly provide information about their customers’ accounts to the major credit bureaus.
When an account becomes delinquent, it may be reported as 30, 60, 90, or 120 days late. That information can then appear on your credit reports and affect how potential lenders view your credit history.
The problem is that credit reporting depends on the information provided by the company reporting the account. If that company’s records are wrong, the inaccurate information can also end up on your credit report.
Common Inaccurate Late Payment Errors
Late payments can be reported incorrectly for many different reasons. Some of the most common problems include:
- A payment was made on time but reported late. You made the required payment by the due date, but the creditor’s records show otherwise.
- A payment was applied to the wrong account. The creditor received your money but credited it somewhere else, leaving your account incorrectly showing a missed payment.
- An automatic payment was not properly processed. A problem with the creditor’s payment system can sometimes result in a scheduled payment not being credited as expected.
- The wrong level of delinquency was reported. An account may be incorrectly reported as 60 or 90 days late when it was never that far behind.
- A payment arrangement was reported incorrectly. Payments made under an agreed forbearance, deferment, or other arrangement may not be reflected accurately.
- A servicing transfer caused a reporting error. When a loan moves from one servicer to another, payments or account information can sometimes be mishandled during the transition.
A single inaccurate late payment can make an otherwise strong payment history look much worse than it really is. If the information does not match your records, it is worth finding out why.
Late Payments During a Forbearance or Payment Agreement
A forbearance, deferment, or other payment arrangement can change what a borrower is required to pay for a period of time. Problems arise when the creditor’s credit reporting does not accurately reflect the agreement.
For example, a borrower may receive permission to temporarily pause payments but later discover that the creditor reported each month as a missed payment. In other cases, the borrower may follow a modified payment plan exactly while the account is reported as increasingly delinquent.
The details of these agreements matter. If you were reported late during a period when you had an approved payment arrangement, review the agreement and compare its terms with what appears on your credit reports.
Attorney Insight: When a Forbearance Was Reported as Six Missed Payments
One case that stands out involved homeowners in Fort Myers whose home was devastated by a major hurricane. Floodwaters reached approximately eight feet inside their home, and they contacted their mortgage company for help while they dealt with the damage.
Their mortgage company granted them a six-month forbearance. They completed the required paperwork and complied with the terms of the agreement.
Six months later, they applied for a home equity line of credit to help pay for repairs that insurance did not cover. Instead of being approved, their application was denied because their mortgage company had reported to the credit bureaus that they were six months behind on their mortgage and in foreclosure—even though they had been granted a six-month forbearance and had complied with its terms.
Their experience shows why inaccurate credit reporting can have consequences far beyond a credit score. They needed access to credit to repair their home, and the inaccurate information on their credit reports stood directly in their way.
When a Loan Is Transferred to a New Servicer
Loans, especially mortgages, are sometimes transferred from one servicing company to another. Unfortunately, these transfers can create opportunities for payment and credit reporting errors.
A payment may be sent to the previous servicer during the transition, applied incorrectly, or not properly reflected in the new servicer’s records. A borrower who made the required payment may then discover that the account has been reported late.
If your credit report suddenly shows a late payment around the same time your loan changed servicers, review your payment records and correspondence from both companies. The reporting error may have started during the transfer rather than with a payment you actually missed.
When the Late Payment Isn’t Yours
Sometimes an inaccurate late payment is not caused by a payment-processing mistake at all. The account itself may not belong to you.
Someone may have opened an account using your personal information, or fraudulent activity may have occurred on an existing account without your knowledge. The first sign of identity theft may be a late payment or unfamiliar account suddenly appearing on your credit report.
If you do not recognize the account associated with the late payment, look beyond the payment history itself. You may be dealing with identity theft rather than a simple reporting error. Learn more about these situations on our Identity Theft page.
What If the Credit Bureau Doesn’t Fix the Late Payment?
Many consumers expect an inaccurate late payment to be removed once they dispute it. Unfortunately, that does not always happen.
A credit bureau may respond that the late payment has been “verified” even though you have records showing that you paid on time or that the information being reported is incorrect.
If an inaccurate late payment remains after a dispute, keep copies of your payment records, account statements, dispute letters, and the responses you receive. These documents can become important if you need to show that the credit bureau or the company reporting the account had an opportunity to investigate the error but failed to correct it.
You can learn more about the process on our Credit Bureau Disputes page.
When Should You Contact an Attorney?
You may want to speak with an attorney if you have disputed an inaccurate late payment and the problem has not been corrected, especially if the error has caused you to be denied credit, pay a higher interest rate, or suffer other financial harm.
At Shmucher Law, I represent Florida consumers dealing with inaccurate information on their credit reports. I can review your credit reports, payment records, and dispute history to help determine why the inaccurate information remains and explain what options may be available under the Fair Credit Reporting Act.
If an inaccurate late payment is still damaging your credit after you have tried to correct it, contact Shmucher Law to discuss your situation.