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Forgotten payment will ding, not ruin, credit score

 
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September 16, 2013
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QDear Erica,

Bloomingdale's called me about my account saying they are missing a payment. The woman said I owe $388.45, I'm past due, and I should pay over the phone right away. I told her that I did pay the entire amount last month and I would have to call her back after checking my bank's bill pay system. I checked and it showed the payment but it had an asterisk saying it did not go though. I was never alerted. I normally would have noticed the extra money in my checking account, but I have been traveling and did not have time. Is my credit score ruined? Is there anything I can do now to save it? I can easily make a total payment again and plan to. This has never happened to me before, and I always pay 100 percent of my balance. Now I don't trust bill pay at all. – Chrissy

AHi Chrissy,

One of the responsibilities of being a bank and credit card customer is to always keep a close watch on your account activity. That includes knowing your current balance so you don't spend or charge too much — and so you know if payments have gone though as intended.Ask Erica

However, in real life with so much going on, even important financial business can be forgotten if you glance away. You're human, and mistakes happen.

I can imagine that if the sum in question was much higher — say, $1,000 — you'd have noticed that the payment didn't go through. But a few hundred dollars can slip through the accounting cracks for a little while. It's also normal to expect that, when you make a payment using your bank's bill pay system, all will go according to plan.

Don't go into a tailspin about all this though. You can probably fix the problem without too much trouble.

It's possible you've been assessed a late fee. According to Bloomingdale's credit card agreement, that fee will be $25. If you've been late within the past six billing cycles, you would pay $35, but that doesn't seem to be the case, based on your letter. If you've been charged a fee, ask Bloomingdale's to waive it. Because you said that you have always paid your bills in full (and it sounds like on time as well) they should be able to do this for you.

If you skipped a payment cycle, it's possible that Bloomingdale's may have reported the account as late on your credit reports. Lenders have different policies about when they report late payments to the credit bureaus. The later you are, the more likely the card issuer is to report it. Once you start approaching 60–to-90-days-late territory, credit damage becomes more probable. Because you don't know if Bloomingdale's has reported the late payment, pull your reports at AnnualCreditReport.com. You can get one free report from each of the three major credit bureaus once per year.

So let's say your late payment ends up on your credit reports. Should it? To me this is a gray area. Credit reports are required to list only correct information. While it's true that the creditor did not receive the money expected at the right time, it's also accurate that you did pay — the money just got stuck somewhere.

It seems that the problem might be on your end (or your bank's). However, if you think Bloomingdale's is at fault for not receiving and processing your payment, the Fair Credit Billing Act (FCBA) could come into play. It's a federal law that protects cardholders from billing errors that the creditor has made.

Write to the card issuer at:

Department Stores National Bank
P.O. Box 8097
Mason, OH 45040

Explain that you did attempt to make your payment, and send evidence by way of a photo or screenshot of the payment. You can also contact your bank and ask it to send proof to you that you can give to the store, but collecting the evidence yourself might be faster. While your issue is being investigated, Bloomingdale's will not be allowed to report the late payment to the credit bureaus.

They still may decide you were in the wrong, but it would be in their best interest to give you a break.

If they don't give you a break, don't worry too much. The worst thing that can happen is that a 30-day late payment appears on your credit reports and your credit scores take a little hit. It won't be too bad because it has never happened before and the balance was small. With credit scores, the recentness, frequency and severity of the infraction matter. So while the problem is fresh and that counts against you, the other two factors are fine. As time passes, your more recent good behavior (assuming you continue to pay on time) will outweigh your slip-up.

You also need to deal with your bank. Call and inquire about the Bloomingdale's account. I have a strong suspicion that you didn't enter the card numbers correctly, so make it right now. Still don't trust online bill pay? Return to the old fashioned method and cut checks by hand. In the future, make a point to review your checking account balance to see if the payment was withdrawn, and contact the store to make sure that it was applied — no matter how frantic your life gets.

Got a question for Erica? Send her an email.


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