How to Remove Mortgage Lates

mortgage statement

So you got a “mortgage late.” You thought you paid your mortgage on time, but for some reason the bank or loan servicer never got your mortgage payment.

It happens every day. Homeowners fail to pay their mortgage on time for one reason or another. I’ve heard every excuse in the book as a former Account Executive. Unfortunately, most fall on deaf ears.

Typically, mortgage lates occur when homeowners are between homes. It’s understandable when you move from one home to another, paying off one mortgage and acquiring a new one. But you need to be extremely careful during that period to ensure everything is paid as agreed.

Again, any excuse you throw out probably won’t cut it, even if it was someone else’s fault, which it often is.

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Mortgage Lates Will Sink Your Credit Scores

  • Late mortgage payment(s) must be 30+ days past due to impact credit scores
  • If you’re only a few days (or even weeks) late you’ll likely only have to pay a late fee
  • So it typically doesn’t happen by accident
  • Impact will vary based on credit history and number/severity of late payments

Aside from having to pay any late fee associated with the overdue payment, you’ll also see your credit scores sink big time if you’re 30 days late (or more) on the mortgage and the information is relayed to the credit reporting agencies.

[When are mortgages due?]

Put simply, mortgage lates kill your credit score. And mortgage lenders and banks aren’t particularly keen on lending to homeowners who couldn’t pay their home loan on time in the past.

However, because of the frequency of mortgage lates committed by homeowners in recent years, some mortgage lenders and banks now allow one 30-day mortgage late in the past 24 months before a subsequent home loan application. So there’s a bit of leeway.

Unfortunately, that only allows you to be late on the mortgage once in the last two years. What happens if you miss your payment more than once, or get a “rolling late,” which essentially counts for two late payments? Or if you get a 60-day late, or worse? What do you do? In most cases, you’ll probably be denied a mortgage.

Get the Mortgage Late Removed from Your Credit Report

  • If you can get the mortgage late removed
  • Your credit score may surge higher
  • And you won’t have to worry about underwriting restrictions
  • Most mortgage lenders won’t extended financing with prior late payments present on your credit report

You’ll likely need to get those late mortgage payments removed from your credit report if you plan on financing any new lines of credit, especially if you plan on buying a new home, or refinancing your current mortgage.

Assuming you still qualify for a mortgage with the late payments, you’ll be stuck paying a premium in the form of a higher mortgage rate.

So it’s a problem either way. Now about getting those lates removed. If your mortgage late is substantiated, there is little you can do about removing it from your credit history. You got the late for a reason that was nobody’s fault but your own, and you have to pay the price.

But if for any reason that mortgage late was the fault of the bank or lender, the loan servicer, or another third party, you can successfully get it removed from your credit report.

In reality, you can *attempt* to get the late(s) removed either way, though you’ll probably see a higher rate of success if it wasn’t really your fault.

Steps for Mortgage Late Removal

  1. Get a copy of your credit reports (all 3)
  2. Get in touch with the bank, lender, or loan servicer reporting the late(s)
  3. If they are at fault and admit it, get a letter in writing and ask them to fix it
  4. If it’s your fault, you can still try to dispute it and get it removed
  5. Similar to the speeding ticket rule where you win if no one “shows up”

The first step is to determine what mortgage account is showing up as delinquent on your credit report. Get a free credit report from each bureau and find out exactly when and from whom the mortgage late is reporting.

The next step is to call, e-mail, or write to the lender, bank, or loan servicer reporting the mortgage late on your credit report. Discuss the late payment with the representative and explain why you believe it is erroneous. This step can be quick and easy, or quite painstaking depending on how easy it is make your point and clear up the mistake.

Assuming the bank or lender recognizes their error, they may agree to send you a letter on their company letterhead detailing the mortgage late, complete with the account number and the time the late or late payments occurred. They should also inform the credit bureaus of their mistake, which will boost your credit scores once the delinquency is eventually removed.

It is essential to keep the letter you receive from them in a safe place, or even make copies of it. You may need to use this letter next time you apply for a mortgage or any other line of credit.

If you need to resolve the mortgage late payment immediately, once your credit is pulled by a bank or lender, simply send the letter to the credit reporting company the bank or lender used to pull your credit. Once they receive the letter, they may be able to remove the late(s) and issue what is called a “credit supplement” that proves it is resolved.

Rapid Rescore to Boost Your Credit Scores Fast

  • If you need your credit scores increased quickly
  • Consider a rapid rescore service
  • Which is basically an expedited data refresh
  • That normally takes weeks to reflect in your credit scores

While this may solve the mortgage late problem, your FICO scores may still be deflated for a while before the credit bureaus take notice. Assuming you need a mortgage immediately, you may not have time to wait.

In that case, you will likely need to do a “rapid rescore” as well to update your credit scores with the three credit bureaus. Instead of waiting for the next data refresh, which could take weeks to a month or longer, you can do a sort of forced credit score update in a matter of days.

This same method can boost your credit scores if you recently paid off some credit card balances or other loans, and the lower balances haven’t yet been reflected in your scores.

It can come in handy if your credit scores are just below a certain key threshold, such as a 720 credit score, which is often needed to receive the lowest mortgage rate available.

Just take note that rapid rescoring typically comes at a cost, which will vary by company and by the number of items that need updating.

Do not waste your money on rapid rescoring if you don’t have a legitimate excuse for the lates, or paperwork to document any error made by the issuing bank or lender.

You really only want to go the rescore route if you know the new information has been accepted, and just not updated yet.

Plan in Advance Instead

  • Even if you can get your lates removed quickly (for a fee)
  • It’s probably best to work on removal long before you apply for a mortgage
  • Because it can be very time-consuming
  • And you may have more success with time on your side

Perhaps a better plan is to resolve any credit reporting issues long before you apply for a mortgage, instead of rushing what could be a very critical and time-consuming issue.

If you aren’t planning on applying for any new home financing in the near future, but want the mortgage lates removed, the easiest way to do it might be online.

Simply visit the credit reporting bureaus websites and look for their dispute page. I have listed them below for your convenience.

Equifax dispute page
Experian dispute page
TransUnion dispute page

You will need to fill out an online form to locate your credit file, then provide any documentation you have to make your case. The good news is it’s free and you’ll get an answer within 30 days. So it’s possible to have your issue resolved fairly quickly, assuming you’re successful.

Above, I noted that you can attempt to have anything removed from your credit report. While this is true, there’s no guarantee of success. It’s basically like hoping a cop won’t show up to court if you got a speeding ticket. If they’re a no-show, you generally get let off the hook, even if you were at fault.

Similarly, if a loan servicer or mortgage lender doesn’t respond to your dispute, the credit bureau might remove the mortgage late, even if it was your fault.

Here’s the problem; your mortgage delinquency is probably on all three of your credit reports. And because mortgage lenders pull a tri-merge credit report, you’ll need to get the late cleared up with all three credit bureaus. The chances of getting all three to not respond might be a big ask and require a lot of luck.

Now if you do have legitimate documentation and upload a copy during the dispute process, there’s a good chance removal will be successful.

But as I warned, the process can take several months for your scores to reflect the changes. Still, if the late payments are removed, your credit scores may rise substantially, potentially pushing you from subprime to A-paper, which could save you thousands on a mortgage.

In summary, always pay your mortgage on time, no matter the circumstances. Mortgage lates are one of the best ways to harm good credit, and poor credit will lead to a higher mortgage rate or no mortgage at all!

Tip: How to get a mortgage with a low credit score.

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