If a late payment on your credit report is wrong, federal law gives you a way to challenge it. A consumer may dispute the entry with the credit bureau reporting it, and generally with the lender that supplied it. The bureau generally has 30 days to conduct a reasonable reinvestigation, and information found inaccurate must be corrected or deleted. Accurate late payments generally may stay for seven years.
A late payment a consumer believes is wrong raises the question of whether the entry is simply how credit reporting works or something the law lets the consumer challenge. This page explains how a payment history entry gets onto a report, what the Fair Credit Reporting Act (FCRA) requires, how a dispute works, and where its limits are.
What a Late Payment Entry on a Credit Report Actually Is
A credit report is what federal law calls a consumer report. Under 15 U.S.C. § 1681a(d), that means a communication by a consumer reporting agency about a person's credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics or mode of living, used or expected to be used to help decide eligibility for personal credit or insurance, employment, or another purpose the FCRA allows. A consumer reporting agency, or CRA, is a company that assembles those reports.
The CRA does not create the late payment. It comes from a furnisher, the lender, card company or other business that sends account information to the bureaus.
A late payment entry may be wrong or improperly reported in several ways, including:
- The payment was made on time but reported late.
- The account belongs to someone else. This can happen through identity theft, or through a mixed file, which the CFPB describes as mixing two consumers' information in a single file.
- The date of the payment or the delinquency is wrong.
- The entry is older than federal law generally allows a report to show.
An error on a report is not automatically a legal violation. The FCRA sets accuracy duties, and whether a company met them depends on the facts.
The FCRA's Accuracy and Reinvestigation Rules
Two accuracy duties sit underneath every dispute. Under 15 U.S.C. § 1681e(b), whenever a CRA prepares a consumer report it "shall follow reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the report relates."
Furnishers have their own duty. Under 15 U.S.C. § 1681s-2(a), a furnisher "shall not furnish any information relating to a consumer to any consumer reporting agency if the person knows or has reasonable cause to believe that the information is inaccurate." The statute defines "reasonable cause" as specific knowledge, other than solely the consumer's allegations, that would cause a reasonable person to have substantial doubts about the accuracy. A furnisher that gives consumers a clear address for error notices is held instead to a related rule: it may not keep reporting information the consumer has told it is wrong, at that address, if the information is in fact wrong. Separately, 12 C.F.R. § 1022.42 requires each furnisher to keep reasonable written accuracy and integrity policies.
Then there is reinvestigation, the CRA's second look at an item after a consumer disputes it. Under 15 U.S.C. § 1681i(a)(1), subject to exceptions in the statute, a CRA must, free of charge, conduct a reasonable reinvestigation and record the item's current status or delete it, within 30 days of receiving the dispute. That period may be extended by up to 15 more days if the consumer sends relevant information during the 30 days, but not if the item has already been found inaccurate, incomplete or unverifiable.
How a Consumer Can Dispute a Wrong Late Payment
A consumer may notify the bureau, directly or through a reseller, that an item is inaccurate or incomplete. The CFPB's dispute page says the nationwide companies can be contacted online, by mail or by phone, and lists their dispute channels.
The CFPB describes what a mailed dispute letter includes: the consumer's contact information, the report confirmation number if available, each error and its account number, a request that the item be removed or corrected, a copy of the report with the item marked, and copies, not originals, of supporting documents. For a wrong late payment, that may be a bank statement or payment confirmation. The CFPB notes certified mail with a return receipt is an option for a record of delivery.
Within five business days of receiving the dispute, the CRA must notify the furnisher and pass along all relevant information the consumer provided, under 15 U.S.C. § 1681i(a)(2). The FTC explains that the business must then investigate and report back, and if it finds its reporting inaccurate, notify all three nationwide bureaus.
A consumer may also dispute directly with the furnisher. Under 12 C.F.R. § 1022.43, a furnisher generally must reasonably investigate a direct dispute sent to an address the regulation allows, with the content it lists, about, among other things, the consumer's payment status or the date a payment was made, and report results within the same period a CRA would have.
To check a report, the FTC says the three bureaus let consumers see their reports free once a week at AnnualCreditReport.com.
What Happens After a Dispute Is Filed
The CRA works within the reinvestigation window described above.
According to the FTC, the bureau must give the results in writing and, if the dispute leads to a change, a free copy of the report that does not count as the free annual report. The CFPB says that if the furnisher provided wrong information or it cannot be verified, the furnisher must update or remove it and notify all the credit reporting companies, which must then update their reports.
A dispute is not a deletion request. If the furnisher verifies the late payment as accurate, it can stay. The CFPB says a consumer in that position can ask the credit reporting companies to include a statement explaining the dispute, which goes to future requesters of the report.
A CRA may decline to investigate a dispute it reasonably finds frivolous or irrelevant, such as one that does not say what is disputed. The CFPB says it must send a notice explaining why within five business days. A furnisher has a parallel duty under 12 C.F.R. § 1022.43(f), including identifying what information it needs.
The CFPB also accepts complaints about credit reports, as its dispute page notes. No dispute or complaint guarantees a particular result.
When a Wrong Late Payment May Have Legal Significance
Adverse action is the point where a report starts to cost something. Under 15 U.S.C. § 1681a(k), the term has the meaning given in 15 U.S.C. § 1691(d)(6), which covers a denial or revocation of credit, a change in the terms of an existing credit arrangement, or a refusal to grant credit in substantially the amount or on substantially the terms requested, and it also includes, among other things, a denial of or worse terms on insurance, a denial of employment, and an action on a consumer's application or transaction that is adverse to the consumer's interests.
When a company takes adverse action based in whole or in part on a consumer report, 15 U.S.C. § 1681m(a) requires it to give notice of the action; disclose any credit score it used and related information; give the name, address and telephone number of the CRA that supplied the report, with a statement that the CRA did not make the decision; and give notice of the right to a free report and to dispute. Under 15 U.S.C. § 1681j(b), the free report is available on a request made within 60 days after receiving that notice.
The FCRA makes remedies potentially available when a CRA or other person fails to comply with certain of its requirements. For willful noncompliance, 15 U.S.C. § 1681n provides actual damages or damages of not less than $100 and not more than $1,000, punitive damages as the court may allow, and, in a successful action, costs and reasonable attorney's fees. For negligent noncompliance, 15 U.S.C. § 1681o provides actual damages and, in a successful action, costs and fees. Both let a court award fees against a party whose unsuccessful filing was made in bad faith or to harass. Under 15 U.S.C. § 1681s-2(c) and (d), however, sections 1681n and 1681o do not apply to a violation of 15 U.S.C. § 1681s-2(a), including regulations issued under it, and the federal and state agencies and officials the statute identifies enforce that subsection. Whether any situation involves a violation depends on its facts. The broader picture is on this site's page about consumer lawsuits under federal law.
Under 15 U.S.C. § 1681p, an FCRA action must be brought by the earlier of two years after the plaintiff discovers the violation or five years after it occurs.
Goodwill Adjustments and What the Law Does and Does Not Require
Here the line between a right and a request matters. The FCRA's duties turn on accuracy. As the FTC puts it, information that is correct but negative, such as a late payment, can be included in a report. Hardship and a long record of paying on time do not make an accurate entry inaccurate.
A goodwill adjustment is a voluntary removal of an accurate late payment by a creditor. No provision of the FCRA requires a creditor to grant one.
A goodwill request differs from a dispute. A dispute says the information is wrong and triggers the reinvestigation and investigation duties above. A goodwill request concedes the payment was late and asks the creditor to remove it voluntarily. A creditor may refuse, and the duties described above do not give a right to removal of an accurate entry that is still within the reporting period.
How Long a Late Payment Can Stay on a Credit Report
The seven-year rule comes from 15 U.S.C. § 1681c(a). Except as authorized in the statute's exceptions, a CRA may not report accounts placed for collection or charged to profit and loss that antedate the report by more than seven years, or "any other adverse item of information, other than records of convictions of crimes which antedates the report by more than seven years." A late payment falls in that second category. The FTC summarizes that a bureau can report most accurate negative information for seven years.
A late mark and an account placed for collection or charged to profit and loss are listed separately in the statute: the late mark falls under 15 U.S.C. § 1681c(a)(5), the account under 15 U.S.C. § 1681c(a)(4). For an account placed for collection or charged to profit and loss, the seven years begin when the 180-day period that starts on the date the delinquency began expires, under 15 U.S.C. § 1681c(c)(1).
An entry that has outlived the period is one a CRA generally may not report under 15 U.S.C. § 1681c(a), unless an exemption in 15 U.S.C. § 1681c(b) applies, such as a report used in connection with a credit transaction of $150,000 or more. A CRA must also maintain reasonable procedures designed to avoid violations of 15 U.S.C. § 1681c, under 15 U.S.C. § 1681e(a).
If You'd Like a Consumer Rights Case Review
A wrong late payment usually involves two companies, a timeline and a paper trail: the furnisher that reported it, the bureau that kept it, the dates of the payment and the dispute, and whatever answer came back. This page covers federal credit-reporting law only; it does not cover credit repair services, debt settlement or state-specific rules. More on the federal statutes is on this site's consumer rights attorney overview.
A reader may request a consumer rights case review through Federal Consumer Rights.
