The credit card companies and loan providers will not show up at your door looking for money. They will phone you on a monthly basis looking for that missed payment.

We wish the lenders were more forceful on the front end. The damage the lenders can do to you and your credit rating over the long term will affect every borrowing decision for a very long time. The missed payments you have today will be on your credit report for up to 7 years. What did you spend your money on that was worth a bad credit report for 7 years.  

You can miss a lot of things in life, but we recommend that you not miss a credit card or loan payment. We have listed below the credit card companies process if you do miss a payment. Here are a few ways on how to get this paid, keep your credit score safe and keep your lenders in good standing. The first step is to figure out why you're short on cash this month? We do not need an answer to this as it happens to all of us. We are not here to judge, only to find solutions and keep your credit score in good health.    

Need to Make some extra money. What skills can you offer to people that you know? Can you post your skills online and look for additional work?

• Do you have a car or truck to do deliveries? Pizza, Uber, Skip the dishes?
• Do your parents family members or friends need some help with cleaning or repairs? 
• Any expense you can cut quickly to reduce your monthly costs so you can make this payment?

Fallen Behind on a Payment 

When you miss a payment on your credit card, the credit card companies go through an automatic process.

1.You may be charged a late fee. This fee can range from $10.00 to $25.00 depending on the policy of the credit card company that you are using. You can check this amount on your credit card statement under terms of service.

Solution

You have not missed the payment yet

If you know that you are going to miss a payment, contact your provider and explain the situation as to why you are unable to make a payment on time. They may waive the late fee "ONCE." If you have done this over and over, do not expect any forgiveness of late fees. (Do not be afraid or ashamed with calling them. They respect people that do the right thing and let them know. They really dislike it when people hide.) 

You are already late in making a payment

You may have forgotten to make a payment or just did not have the money. That part does not matter. You are now on the clock. You need to contact the lender and let them know when you are going to make the payment and the amount. The lender will usually call you within a few days of the late payment. Looks better on your file if you were the one to call them. If you get the payment in before the next payment is due, it may stay off of your credit report. 

2. If you've reached 60 days past due, your interest rate will increase making your minimum payment increase. We have seen examples where the client has a promotional rate of 11% and the interest rate goes up to 25% which may be the credit card companies standard rate. 

Solution

You have to contact the credit card company with what is happening in your life. Could be a job loss or whatever the issue, you need to let them know and ask about any terms they may agree to protect your credit rating. Make sure you can pay something when you make this call. If you have received a promotional rate from the credit card company, that will be reversed to the credit card companies highest rate.  

3.Every late payment is added to your credit report. These are glaring when you review your credit score.

Once this has landed on your credit report, it will remain there for the next 7 years. After 3-4 years of having a clean record, lenders will look at these as a small glitch from long ago. If you keep your payments up, it will be excused but not forgotten. (The problem is that it is not forgotten for 7 years. Make your credit card and any other payment s a priority.) 

4. Your credit score will start to drop. Credit bureaus use the FICO score breakdown below to determine your credit score. 35% of your score is made of your payment history.

Applying for a Loan when your credit has dropped

Depending on how many payments you've missed and how often will determine how low your credit score will drop. An easy way to boost this back up is to set up auto-withdrawal on all of your lender's payments. Can improve your credit score by 100 points in 6-18 months. Try not to borrow money for at least 6 months after you've missed payments. It will be recorded on your credit score if they do a hard pull and 

Hard Pull vs a Soft Pull by lenders

We have heard extreme cases where people were shopping for a mortgage with over 10 providers and dropped their credit score by 100 points. They went to 10 different banks, credit union and online lenders who pulled their credit. The credit report states every request. It looks to the lenders that this person is being denied credit when all they were doing was shopping. Their credit will bounce back quickly, but this hurts at the time while their credit rating drops and the loan is based on their credit score at the time of this loan.  

Applying often will hurt your credit score. If you have been turned down for funding, review your credit score and find out if you have missed anything before you apply again. You may want to consider a secured loan or a co-signer as well before applying again.  

Soft Pull

A soft pull is an inquiry where the lender is viewing your credit score only. They have not done a complete review of your credit history. 

Example: Lender only works with consumers that have a credit score above 660. You've applied and your credit score is 625. Their computer processing system stop immediately.

Hard Pull

Once the client is approved and passes all preliminary qualifications including soft pull, then they receive an offer. The lender's sales team speaks to the client about the offer and goes through all of their options. Then it goes to underwriting with all docs, once everything is verified a contract is discussed. The lender reiterates to the client that a hard pull will occur at this time. 

Recommended

We recommend that you contact your credit card company and set up a payment for the minimum payment only to come from your bank account every month. Once you have this done, you are mentally aware that this money cannot be spent and you will be hit with overdraft fees if you miss it.

If you are not willing or unable to do set up the minimum payment, set up a reminder on your phone or create an email reminder. Depending on the type of phone, they are easy to create. 

Charge-Off

A charge-off from your credit report means that your credit card company or lender has written off your loan for the tax deduction. If you have not made a payment of any amount for 6 months, the lender can write off the debt and may sell it to a collections company. You are still responsible for this debt and it will remain on your credit score for 7 years. The charge-off may have been something that you did not pay or an error on your credit report that you were unaware of.

You do have the ability to negotiate with the lender on a Charge-Off

If you have gotten to this point, you will need to start saving your money in a separate savings account to propose a settlement. Once you have saved 50% of what you owe on your debt, contact the credit card company and request a settlement.

You will be negotiating three things and we suggest that you do not pay out any amount without the removal of the charge off on your credit report. 

1. A complete payout in some percentage. We suggest you start at 50%. If the person you are speaking with cannot negotiate, ask for someone that has the ability to make "final adjustments" to your account. You want the creditor to report that the amount is paid in full. If they will not do this, ask them to write that the account is "closed or settled" or "paid at an agreed amount". Do not agree to pay any amount unless you have a set amount you will be paying, that the account is closed and the charge off is removed.  

2. Setting up a monthly payment that you can manage without missing a payment. We would suggest that you offer a preauthorized payment plan to give the lender assurances that you will make the payments. As in number one above, once this negotiated amount is paid, the account is closed or settled in full and the charge-off is removed from your credit report.  

3. Removing the Charge off from your credit report is a must. If the charge off is going to be on your credit report anyway, hold off on paying this creditor until they will negotiate. If the lender will not remove the charge off, find a lender you can pay now that will remove the charge off. You can come back later to any lender that will not cooperate with you now. At this point, you are going through this process to save whatever you can of your credit score and credit report.  

4. Once you have an agreement with the lender, get it in writing before you send them anything. Again, make sure you are satisfied with how they explain the removal of the charge off. If you are not satisfied, do not start making any payments until you are.

5. After the lender is paid, call the creditor to make sure the charge off is removed. If they do not remove it, use the sample letter above and contact the credit reporting companies with your written documentation attached.   

Hiring a Debt Settlement Company    

If you were to hire a debt settlement company, they will instruct you to start sending money to them every month. Once the debt settlement company have enough of your cash in their account, they call your credit card company, lenders and negotiate a settlement with each vendor one by one.

The entire time you are sending money to your debt settlement company, you are no longer making payments to your lenders and all of your accounts are being driven to Charge-Offs. Your lenders are now dealing with the debt settlement company instead of you and all of them are in charge-off positions.

The debt settlement company will charge you approximately 30% of the amount you pay in fees to provide this service. Your credit score will be ruined after you go through this process and you will pay an additional 30%. If you do not feel that you can manage the negotiations with the lenders, the fees may be worth it to you.

We all make mistakes

Just remember, we all put our pants on the same every day. Don't let the shame ruin you. You only made a mistake, you are not a mistake. Hold your head up high and fight for yourself. you can talk to the lenders. They deal with bad debt every day. Be polite and stand by your word.   

Credit Report Errors 

You may have checked your credit card statement and found problems or errors with your credit report. (These errors are normally found when we are trying to borrow money, the worst time.) You have checked your credit score is and its dropped for some reason. 

If you see an error or discrepancy in your report, you can dispute these issues with the credit bureaus.  

The three credit bureaus have set up one website with a toll-free number and mailing address where you can order your free credit report. To visit the website see annualcreditreport.com, call 1-877-322-8228 or complete the request form and mail it to;

Annual Credit Report Request Service

PO Box 105281 

Atlanta, GA 30348-5281

They will request your SSN number and date of birth. if you have moved in the past two years, you may need to provide your old address.  They will ask you security questions relating to monthly payments like your mortgage or credit card minimum payment. You may want to have a bank statement nearby when you talk to them.

Correcting Errors on Your Credit Report 

Information provided by Federal Trade Commission Disputing Errors on Credit Reports 

Under the Fair Credit Reporting Act (FCRA), both the credit reporting company and the information provider (that is, the person, company, or organization that provides information about you to a credit reporting company) are responsible for correcting inaccurate or incomplete information in your report. To take advantage of all your rights under this law, contact the credit reporting company and the information provider.

In addition to providing your name and address, your letter should explain each item in your report that you are disputing. State the facts and explain exactly why you are disputing the charge or fee. Provide copies of statements or reports to make it easy for the investigator to go through the information. Send your letter by certified mail marked "return receipt requested" so you can document what the credit reporting company received. (Make sure to keep copies for yourself).

Tell the credit reporting company, in writing, what information you think is inaccurate. Use the sample letter below to complete this process. Include copies of documents that support your position. In addition to providing your complete name and address, your letter should clearly identify each item in your report you dispute, state the facts and explain why you dispute the information and request that it be removed or corrected. You may want to enclose a copy of your report with the items in question circled. Send your letter by certified mail, “return receipt requested,” so you can document what the credit reporting company received. Keep copies of your dispute letter and enclosures. All addresses are provided above. 

The credit reporting companies must investigate the items in question — usually within 30 days — unless they consider your dispute frivolous. They also must forward all the relevant data you provide about the inaccuracy to the organization that provided the information. After the information provider receives notice of a dispute from the credit reporting company, it must investigate, review the relevant information, and report the results back to the credit reporting company. If the information provider finds the disputed information is inaccurate, it must notify all three nationwide credit reporting companies so they can correct the information in your file.

Here is an example of the letter. This copy is from the Federal trade commission site:

When the investigation is completed, the credit reporting company provided you the results in writing and a free copy of your report if the dispute results in a change. This free report does not count as your annual free report. If an item is changed or deleted, the credit reporting company cannot put the disputed information back in your file unless the information provider verifies that it is accurate and complete. The credit reporting company also must send you written notice that includes the name, address, and phone number of the information provider.

If you ask, the credit reporting company must send notices of any corrections to anyone who received your report in the past six months. You can have a corrected copy of your report sent to anyone who received a copy during the past two years for employment purposes.

If an investigation doesn’t resolve your dispute with the credit reporting company, you can ask that a statement of the dispute be included in your file and in future reports. You also can ask the credit reporting company to provide your statement to anyone who received a copy of your report in the recent past. You can expect to pay a fee for this service.

Tell the information provider (that is, the person, company, or organization that provides information about you to a credit reporting company), in writing, that you dispute an item in your credit report. Use the sample letter above. Include copies (NOT originals) of documents that support your position. If the provider listed an address on your credit report, send your letter to that address. If no address is listed, contact the provider and ask for the correct address to send your letter. If the information provider does not give you an address, you can send your letter to any business address for that provider, they are listed above.

If the provider continues to report the item you disputed to a credit reporting company, it must let the credit reporting company know about your dispute. And if you are correct — that is, if the information you dispute is found to be inaccurate or incomplete — the information provider must tell the credit reporting company to update or delete the item.

Transunion Mailing Address

Transunion Consumer Relations 

P.O. Box 2000 Chester PA 19016-2000

Transunion Phone Numbers: 

• 877-322-8228 Free Annual Credit Report Information
• 800-916-8800 Disputes, Items and Status Checks
• 800-888-4213 Purchase a Credit Report
• 888-909-8872 Place a Security Freeze
• 800-493-2392 Credit Monitoring Customer Support
• 866-922-2100 Business Services Assistance
• 610-546-4771 Fax Machine Services

Experian Mailing Address

Experian National Consumer Assistance Center 

P.O. Box 4500 Allen, TX 75013

Experian Phone Numbers: 

• 877-284-7942 Existing Customer Support
• 800-509-8495 Dispute Credit Report Items
• 888-243-6951 Business Credit Services
• 888-397-3742 Report Requests and Fraud Assistance
• 972-390-4908 Fax Machine Services

Equifax Mailing Address

Equifax Credit Information Services, LLC 

P.O. Box 740241 Atlanta, GA 30374

Equifax Phone Numbers: 

• 800-685-1111 Request a Free Credit Report
• 866-349-5186 Dispute a Credit Report Item
• 888-766-0008 Install Fraud Alert on Your Profile
• 866-493-9788 Existing Customer Service Support
• 888-202-4025 Business Solutions
• 404-885-8078 Fax Machine Services