How can I fix my credit score after a late payment?

You can fix your credit after a late payment by disputing the entry if it is an error or by making up the payment then asking the creditor for a goodwill deletion if it’s accurate. Moving forward, keep a credit card in good standing, maintain low utilization, diversify your mix, and avoid too many inquiries.

How to Fix Your Credit Score After a Late Payment

1. Dispute Errors on Your Credit Report

   If the late payment is a mistake, you can file a dispute with all three of the major credit bureaus. If you have supplemental documentation, include it with your claim. The credit bureaus typically respond to disputes within 30 to 45 days. Note, if the entry is accurate, it will remain on your credit report for 7 years, although the impact will lessen over time.

2. Ask for a Goodwill Deletion

   After you’ve made up the late payment, you can ask the creditor for a goodwill adjustment to remove the entry from your report. Although it’s unlikely they will delete the derogatory mark, goodwill requests are successful in some cases.

3. Make On-Time Bill Payments

   Payment history is the most significant factor impacting your credit. In order to rebuild your credit following a late payment, it’s important to make all of your payments on time in the future. Even one late bill payment reported to the credit bureaus can significantly damage your credit, although the impact lessens over time.

4. Add Rent or Utility Payments

   Rent and utility accounts are not automatically listed on your credit report. Third parties like LevelCredit, Experian Boost, and eCredable Lift can send major credit bureaus your payment history. A record of on-time payments will improve your credit.

5. Keep Credit Utilization Low

   Ideally, your credit utilization ratio should be between 1-10%. Anything over 30% may negatively affect your score. There are several ways to reduce your credit utilization, including paying down your credit card balances, increasing your credit limits, or applying for a new card. Note, if you apply for a credit limit increase or new card, the issuer may perform a hard inquiry which will temporarily lower your score by a small amount, typically 10 points or less. However, in the long-term you will benefit from having more available credit. 

6. Avoid Too Many Hard Inquiries

   Although increasing your overall credit limit and keeping your credit utilization low will help your score, applying for multiple cards at the same time will damage it. In fact, experts generally recommend applying for no more than two credit cards per year. Credit inquiries remain on your credit report for up to 24 months and affect your score for up to 12 months. New credit cards also lower the average age of your accounts, which negatively impacts your score.

7. Diversify Your Credit Mix

   Credit cards or lines of credit are considered revolving accounts, while a personal loan, mortgage or auto loan is categorized as an installment account. Having a mix of both revolving and installment accounts actually helps your credit. Although your credit mix is not as important of a factor as your payment history or credit utilization, it can still have an impact on your score.

You can check your credit report and get personalized credit-improvement tips for free here at WalletHub.