People often assume that when it comes to bank and credit card fees, there’s no talking your way out of it. If the bank charges you, it’s a done deal. And credit scores? Forget about it—there are official bureaus that figure those numbers. So there’s no use in arguing with the banks and bureaus, right? They must be right…right? Wrong. There’s always room for negotiation. Cushion, for instance, sees a 50% success rate on all late fee negotiations, meaning for every $100 we fight on behalf of our customers, we get on average $50 back. It’s always in your best interest to stand up for your finances.
A CreditCards.com sample survey found that late payment fees are the most common credit card–associated fee in the U.S. With late payments come a great deal of consequences—including potential damage to your credit score. As rules of thumb: The later your payment is and the higher your credit score is, the more damage a late payment will cause. The average FICO score in the third quarter of 2019 was 706, considered “good” by the scoring service’s standards. With this score, you could expect to see a drop of more than 50 points after a late payment.
That’s, of course, if you don’t take action before the situation gets out of hand. Here are the steps you should take immediately when you realize your credit score has dropped due to a late payment, and three other things you can do to offset the damage.
First, determine whether the drop in score is legitimate: Was it a mistake on the part of your credit card issuer or the credit reporting bureau, or did you really miss a payment?
If your issuer made a mistake and falsely reported a late payment, your job will be fairly simple. You should dispute the inaccuracy with your credit card issuer as quickly as possible before it does more damage to your score. You’ll need to prove that you made at least the minimum payment by the due date, so be prepared with any necessary documentation. You may also have to dispute the inaccurate information with the credit reporting agencies—Equifax, Experian, and TransUnion.
If you missed a payment, the dispute may not be that simple, but it’s still worth the effort. Credit card issuers like to keep their customers happy, so chances are they will be willing to work with you. Contact your issuer as soon as possible (or go the stress-free route and let Cushion handle your fee negotiation automatically). Be prepared with your reason for the late payment and plans to settle your debt, whether you’ll be paying in full right then or have a proposed payment schedule.
You can ask them to remove the late fee, but if a higher credit score is what you’re looking for, you’ll have to ask your issuer to remove the negative mark on your credit report. Ultimately, the decision to waive the fee or remove the mark is up to the issuer; however, making a payment on the delinquency will not further hurt your score—it will most likely help it. Paying, at least in part, can help in a couple ways:
After negotiating with an issuer but before paying off your debt, get the settlement in writing, whether the issuer has agreed to lessen your balance owed, remove the negative mark from your credit report, or otherwise. And remember: Negative marks fall off credit reports seven years after the delinquency. So if you missed a payment in May 2020, you can expect the mark to be completely eliminated from your score by May 2027.
If you’re not able to call the issuer, you can also send a goodwill letter detailing the reason for your missed payment and your plan to pay off the debt; however, you could wait weeks for a response this way.
It’s time to offset the damage.
If you’ve convinced your issuer to remove the negative mark and your score is somewhere closer to normal, consider these damage-control tips freebies. Even if your score isn’t suffering, searching for discrepancies and reassessing your credit utilization are key ways to boost an already-ideal credit score.
Cushion helps you waste less money, save more, and live a financially healthier life. We monitor your bank and credit card accounts 24/7, find and alert you about pesky fees, let you know which fees are negotiable, which banks are cooperative, and can even automatically negotiate on your behalf.* To date, Cushion has secured customers more than $11 million in bank and credit card fee refunds—and we’re just getting started.
*Cushion only negotiates fees with high refund odds. We cannot guarantee any negotiations, a regular frequency of negotiations, or fee refunds—your bank makes the final call.