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Question By
vkvimMD

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missed payment - payoff loan
I have a missed payment in one of my auto loans. The automatic payment did not work and the payment was late my 30 days when I found the issue and re-setup the automatic payment. It was reported in the credit report. I called the bank explaining the mistake and they are not willing to remove it from the credit report. I have enough money to pay off the entire loan. Will paying off the loan and closing it improve my credit score ?

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Unfortunately NO... Paid and closed account isn't ground for removal. Derogatory mark will be reportable and can remain for 7 years plus 180 days from when it happened, usually it will be removed in 7 years. Make matter bit worse?, many people have been report that their score drop 50 points when paid off their loan. Tho I don't see any data if their score recovered in x number of months.

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One option, maybe you can send them a "good well" litter to the lender, ask them to remove the late payment, explain why it was late and it's only one time thing (if it was the case). You might have to do it few times and or send it to their higher ups.

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Johnny's answer was excellent, definitely try sending "goodwill letters" asking for forgiveness to every level of the bank that you can. And yes, paying off the loan would only make things worse.

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