It is always advisable for you to pay your credit card debts on time. However, there might come a time where you may just end up missing your payment, be it due to a lack of funds, poor timing, or simple forgetfulness.
You can still make a late payment on your card with some extra interest. Unfortunately, a late payment may land you a black mark on your credit report.
Your credit report is a very important record that summarises your credit history, including the types of credit accounts you’ve had, your payment history and certain other information such as your credit limits.
It is a key part of what makes up your credit score and plays a huge factor as to whether or not financial trusts you enough to approve your loans or credit cards.
As such you will want to avoid any blemish on your record as much as possible. However, if you happen to miss a credit card payment and end up with a late payment record, how long will the issue stay on your report?
How long does a late payment stay on the credit report?
As a general rule of thumb, late payments will typically remain on your credit report for at least 24 months with CTOS and 12 months for CCRIS. For example, if you had a late payment in January 2021 and brought your account to current in May 2021, then the late payment will be removed from your credit report no earlier than January 2023. Most banks have their own internal guides but it’s good to know the general rule of thumb.
In Malaysia, the Central Credit Reference Information System (CCRIS) is one of the key references for all your credit/loans with the bank. The bank will use this CCRIS report to evaluate or assess your loan eligibility. The CCRIS report grants you access to view your payment records with the bank and allows you to check if you have any late payments on record.
How late payments affect your credit score
A late payment on your record can have a huge impact on your credit score, but in general, it is always negative. The severity of the issue can vary depending on the person’s profile and the reason for the late payment. CCRIS has a rather intuitive approach to keeping track of late payments.
- If you often pay by the due date, which is before the deadline, your records will show a ‘0’ each month. This indicates that you have never made a late payment to the bank.
- If you make a payment after the due date, your monthly report will indicate ‘1’. This represents the fact that you have paid late for one month.
- Likewise a “2” will denote that you have made a late payment for two months.
Generally speaking, the higher this number is on your report, the more severe the negative impact on your credit score.
Can you get a late payment record removed?
For the most part, no. A late payment on your credit record is likely to stay until it slowly drops off after 12 months (24 months for CTOS). However, that does not mean there aren’t some things you can try. Who knows; you might get lucky. The first thing you should do is to pay off your credit card debt as soon as possible. The sooner the better. After that, you can try these methods:
Negotiation
You can try negotiating with your lender or bank regarding the payments. While not a guarantee, if you have been with the lender for a long time, you could try arguing your case to remove the late payment. They may require you to pay the whole amount in full or you can try for partial settlements. If you are lucky enough to get the late payment removed from your history, make sure to have it in writing.
Goodwill letter
Again, this is not a guarantee, but there is no harm in trying. A goodwill letter that explains your situation clearly as to why you were unable to make the payments on time can work if you have a good history with the lender beforehand. However, it is crucial that your history is squeaky clean up to this point, as this method can only work if you have a history of making payments on time.
Dispute error
Believe it or not, sometimes a mistake can land in your credit report. If you have any payment which is marked as late, you can also raise a dispute regarding the issue. You have the right to challenge the lender in case of any error found in your credit report.
What happens if you don’t succeed?
Most will likely not succeed in appealing their late credit record. As such, you will have to ride out the 12 months until it drops off record naturally. In the meantime, there are other things you can do.
Rebuild your record
With late payments on your record, you will need to start rebuilding your credit to raise your scores. The most important thing to do is avoid additional late payments. Then, you will need to get your future payments in on time going forward. Try to send in your payments early as well; and if you are having issues remembering, set up automatic electronic payments for at least the minimum amount.
Also make sure you don’t get too close to your credit limits on any of your accounts. A good rule to stick to is to utilise only 30% or less of your total credit. Adding new installment loans and making those payments on time might also help, but only borrow if it makes sense to borrow.
Borrowing with bad credit
Late payments mean lower credit scores, which in turn means that you will have a harder time borrowing money. However, this doesn’t mean that you can’t. The key is to avoid predatory lenders (such as payday lenders) who charge high fees and interest rates. While CTOS keeps your late payments on record for 24 months, CCRIS only keeps it for 12 months. So you can try applying for another loan 12 months after your missed payment, assuming you have not missed another payment since.
Co-signers can also help you to get approved for certain types of loans. Your co-signer applies for a loan with you and promises to make the payments if you stop paying on time. Though this is quite a risk that the co-signer is taking.
Remember that any late payment will be reflected in your credit report for at least years. This means that you will have to live with this negative mark on your score for years and flag you as a rather unreliable person to lend money to. Rather than going through all the hassle, it is much easier to schedule automatic payments and make timely payments.
