How do I get late payments off my credit reports?

Dear Liz: I filed a personal Chapter 7 bankruptcy five years ago to erase my debts. The reason I filed wasn’t because I lived beyond my means, but because I used my personal credit to finance my business, which fell apart after the Sept. 11 terrorist attacks. Since that time, I have emerged with credit scores in the 665 to 700 range. My problem is that when I apply for loans, I’m sometimes denied because the creditor says I have too many late payments on my credit cards. Those late payments are all from my previous life and the debts were wiped out in the bankruptcy. Now I pay everything off in full every month. How can I get these late payments off my credit reports?

Answer: You’ve restored your credit scores, the three-digit numbers lenders use to help gauge your credit-worthiness, to near-prime levels. Typically, scores of 720 and above are considered “good” under the FICO scoring system used by most lenders. Scores in your range are acceptable to many lenders as well, although you’ll typically pay higher interest rates than if you’d had unblemished credit.

Still, as you’ve discovered, your scores and credit history aren’t acceptable to some lenders. You may feel that the five years that have passed since your bankruptcy are an eternity, but these potential creditors obviously don’t. Your problems paying bills in the past lead them to suspect you may default again. (Most lenders don’t care why you were late, by the way; they just care that you were.)

If you want a loan from these particular lenders, you’ll probably have to wait until the late payments drop off your credit reports–typically about seven years after the delinquencies occurred. The bankruptcy, which also will discourage some lenders from accepting you, legally can stay on your credit reports for 10 years.

Some fly-by-night credit repair outfits promise to “clean” your report of negative marks. Don’t fall for their scams, which usually involve committing fraud or trying to overwhelm the credit bureaus with disputes that often result in only temporary improvement, if that.

A better course is to continue using credit responsibly, as you evidently have since your bankruptcy, and to shop around when you need a loan. Just because some lenders have turned you down doesn’t mean others will.