Credit Report Laws on Late Payments

A late payment entry on your credit report harms your credit history and score. Late payment entries are negative citations from your creditor shown on your credit report for an account you did not pay on time. The Fair Credit Report Act, a set of federal laws regarding credit reporting practices, dictates how credit bureaus report late payments.

Function

The Fair Credit Reporting Act governs the way credit bureaus report all information on your credit report, including how long negative accounts and past due payments can be shown. Consumers were also granted rights in regard to the credit report and the information it contains. A person who denies you credit or employment based on your credit report information must notify you of the action. You must receive the name and contact information of the bureau the information came from, and you have the legal right to know what your credit report contains.

Effects

Your creditor can report a late payment one week after the due date, but creditors commonly post late payment citations at 30-day intervals. Once a payment is overdue by three months, the account is posted as "past 90 days." Accounts more than three months overdue are usually sent to a collection agency and reported as "charged off" by the creditor, but the creditor can continue to report the past due status if the account is not put into collection.

Overdue accounts you are still not paying stay on your report for seven years after the bill first became late, with your late payment history shown on the report for the same length of time.

Considerations

An account you are current on with a late payment history remains on your report as long as the account is open -- or for 10 years after you close the account yourself -- but the late payment history falls off after seven years.

You have the right to dispute information on your credit report, including a late payment entry. You must use the steps given by the credit bureau to dispute the item, and you may be asked to give supporting documentation.

Misconceptions

A credit bureau generally cannot report information on accounts that are more than seven years old, or 10 years old if the debts were discharged in a bankruptcy. Sometimes creditors "redate" debt to enter the negative information on your report in an attempt to get payment. Redated debt is commonly referred to as "zombie debt," and the practice is illegal under the FCRA.

The late payment history from a bankruptcy account typically does not show up on your report, as the account is listed as "included in bankruptcy" with limited information showing.