What happens when you are past due on your credit card accounts, and you want to have the late notices removed from your credit reports? One of our readers sent in this question:

I have missed four months of credit card payments on a high interest, high debt
($10,000) credit card. If I can payoff the entire debt next month (10,000
dollars), will the credit card company reverse any negative credit reporting on
me? What will my credit show?

Brandy

Brandy, you are in an excellent position to negotiate with your credit card company. Because you are so past due, your credit card company is beginning to lose hope that you will pay. Because you can afford to pay the balance in full next month, all the negotiating power is yours. Your credit card company will definitely negotiate with you to pay down a large balance immediately – especially when the account is so past due.

When you call to pay the balance in full, you can negotiate with your credit card company for some (or all) of the following things:

• To remove the late marks from your credit report - More on this in a minute, since it was your original question.
• To remove every single one of the late, or over limit fees on your account.
• You could possibly have the account re-opened, if it’s been closed. That is not a guarantee, just a possibility, and it will depend on the bank’s policy.
• If your interest rate was raised because you did not make payments (this is standard procedure) then you can negotiate to have your interest rate reduced, and the balance re-calculated from the point that your interest rate went up. Again, this depends on the bank’s policy, but it is worth asking for because it could save you quite a bit of money.
• You could also offer your credit card company a settlement for a reduced amount – Instead of negotiating away all of the fees and extra interest on the card, you could simply call and offer them $7,000 to pay off the card instead of $10,000. They will negotiate with you because you are so past due, and because you can make a large lump payment.

Now, there is a difference between having the fees and interest removed, and just doing a settlement as far as your credit report is concerned. Namely that having the fees and interest removed from your account will not show up on your credit report as a debt settlement.

If you actually offer a lesser amount on your debt and do a settlement with your credit card company, then your credit account will be noted that way and it could lower your credit score a little – even if you removed the previous late notices.

Getting the late notices removed from your credit report:

You will need to attack this problem in two ways.

#1: When you call to pay your balance in full, tell the representative that you can pay the balance in full, but that they must be willing to remove the prior four months worth of late notices before you do. You must have proof in writing that they are going to do this, or it will most likely never happen!

Get them to fax you an agreement, or send you a letter in the mail that states what’s going on: That you agree to pay X amount, and they agree to remove all of the late notices on your credit report. If it’s not in writing, it’s not real, so don’t make a payment before you do have something in writing from your bank.

Additionally, ask the representative you speak to to note your account for you. Make sure that somewhere on your account it is noted that those late reports are to be removed. That way, no matter who you call and speak to, the next representative will know what’s going on.

#2: Check your credit reports, and challenge as needed

Unfortunately, there is still a possibility that the late notices will not be removed. If that happens, all you need to do is challenge the late reports through all three credit bureaus. That will be as simple as sending in the letter you got from your bank stating that they would remove the late notes, and proof of your payment to the bank to show you kept your end of the bargain.

That’s it! The late notice will be gone if you take those steps.

You can get instructions for challenging items on your credit report here:

Have a question for us? Leave a comment below!

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This entry was posted on Friday, April 24th, 2009 at 13:18 and is filed under Credit Score Repair FAQ, Debt Reduction FAQ. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.