If you’ve even missed a bill payment and noticed that your credit score was in free fall, you may be wondering: how long does a late payment stay on your credit report?
In this article we will review how credit reports are created, how late payments impact your credit score, and how long these problems will stay on your file.
Ready? Let’s get started.
What is a credit report, and how are they created?
Your credit report is a summary of your personal credit and is created by a credit bureau. Canada’s credit bureaus are Equifax and TransUnion, and these two firms are responsible for the credit reporting on nearly all Canadians. These agencies gather information about creditors’ borrowing and repayment history, then distill this data into a single report.
Potential lenders use this report to help them assess your risk as a borrower. They will look at how much debt you currently carry, whether you have made any late payments, and what kind of accounts you have (I.e., lines of credit, mortgages, etc.).
Your credit score is based on the information in your credit report. The better your payment history, the higher your credit score will be. Conversely, your score will suffer if you have missed payments or have other negative marks on your report.
What does it mean to have a late payment for your credit report?
A late payment is when you do not make your minimum required bill payment by the specified due date. This can happen for several reasons, including forgetting to make a payment or not having enough money in your account to cover the bill.
If you have ever made a late payment, you will know that it can severely impact your credit score. In fact, even one late payment can cause your score to drop by 100 points or more!
Why does a late payment hurt your credit score?
Late payments cause your credit score to drop, indicating that you may struggle to make your minimum monthly payments. This can be a red flag for potential lenders, as they may think you are more likely to default on a loan or line of credit.
This also means that if you are trying to get a mortgage or another loan, the lender will see your late payment and may be less likely to approve you for the loan. Or, if they do approve you, you will likely face a higher interest rate.
Where can I check my credit report?
You can check your credit report for free by requesting a copy from either Equifax and TransUnion. You are entitled to one free credit report from each agency every year.
To request your free credit report, which includes your free credit score, you can visit the website of either Equifax or Transunion, or you can call them directly.
What if I find an error on my credit report?
If you find an error on your credit report, you can dispute it with the credit bureau that issued the statement. They will then investigate the matter and make any necessary changes to your report.
However, you must remember that they will only correct incorrect data on late or missed payments, available credit, secured loans, etc. They cannot force a lender to change what was reported.
How long does a late payment stay on your credit report?
In Canada, late payments will stay on your credit report for six years from the date they were first reported. However, it is essential to note that late payments have a reduced impact on your credit score the further back they are.
This means that if you have made a late payment in the last year or two, it will have a much more significant impact on your score than a late payment made five or six years ago.
What can you do if you have a late payment on your credit report?
If you have a late payment on your credit report, there is not much you can do to remove it. However, there are some things you can do to lessen its impact:
Make On-Time Payments
Make all of your payments on time in the future. This will help to offset the negative impact of the late payment.
Ask Creditor To Remove The Late Payment
If you have a good credit history, consider asking your creditor if they would be willing to remove the late payment from your report. They may be willing to do this if you have been a good customer up until this point.
Work On Other Improvements
Try to improve your credit score in other ways. This can include paying down your debt, maintaining a good credit utilization ratio, and regularly checking your credit report for errors.
Can you dispute a late payment?
If your late payment is accurate, you will not be able to dispute it. However, if you believe the late payment is inaccurate or unfair, you can file a complaint with the credit reporting agency.
In this situation, the credit agency will likely ask for proof that you paid your bill on time. Be prepared to show this proof, as it’s unlikely they will “take your word for it.”
Remember, any late payment will stay on your report until the credit reporting agency removes it.
Is there a statute of limitations for disputing a late payment?
There is no statute of limitations for disputing a late payment. However, it is important to note that the older the late payment is, the less likely the credit reporting agency will investigate your claim. If you have discovered an older missed payment that is inaccurate, it’s still worth fighting as it can help boost your score.
However, at some point, it may just be best to continue focusing on rebuilding your credit score in other ways.
Can you still get a loan with a late payment on your credit report?
While a late payment on your credit report will make getting approved for a loan more challenging, it is still possible. However, you may face a higher interest rate or need to provide additional documentation to the lender.
If you are considering applying for a loan, check your credit score and credit report first. This will give you an idea of where you stand and what kind of loan terms you may be able to qualify for.
Making on-time payments going forward is the best way to improve your chances of getting approved for a loan, even if you have a late payment in the past.
What is the best way to improve your credit score with a late payment?
There is no single way to improve your credit score. Instead, it is crucial to focus on building a solid credit history overall. This can include making all of your payments on time, maintaining a good credit utilization ratio, and regularly checking your credit report for errors.
If you have a late payment on your credit report, try to make all of your payments on time. This will help to offset the negative impact of the late payment. You may also consider asking your lender if they would be willing to remove the late payment from your report.
Where to get a loan if you have a late payment on your credit report
If you have a late payment on your credit report, it may be more challenging to get approved for a loan. You may face a higher interest rate or need to provide additional documentation to the lender.
At SkyCap Financial, we specialize in installment loans for people with bad credit. If you have had credit problems in the past and need a lender willing to work with you, apply using our online application form. We know how vital a loan can be for your financial future, so we review and approve most loans within 2-4 hours.
A late payment on your credit report can have a severe negative impact on your score. However, you can take steps to improve your credit score and get back on track.
Remember to focus on building a solid credit history overall, making all of your payments on time, and regularly checking your credit report for errors.
If you have a late payment in your past, don’t let it hold you back from applying for a loan. At SkyCap, we can help you get the funds you need quickly. Apply today!