Friends were coming for dinner, and my husband decided to be helpful by getting rid of a stack of papers I had out on the kitchen counter. Unbeknown to me, he swooped everything up and stashed it on top of the refrigerator. He thinks that’s a great storage place because no one under six-feet-two can touch anything that’s up there.

So we have a lovely dinner party, and three weeks later I finally get around to standing on a chair to clean on top of the refrigerator. That’s when I discover that my Visa bill has been rotting away unnoticed; and as of that very day, I am 31 days late.

“What’s this?” I shriek, wild-eyed with horror.

For me, the Queen of Credit, to be past the 30-day mark and get a “late pay” on my credit report is totally unacceptable. I fly off the chair like a bat out of you-know-where, yelling, “Why did SOMEONE put my Visa bill up high where I can’t see it?!”

Because I cannot tolerate a ding on my credit, there’s only one thing to do. Call the Visa company and ask them not to report me late.

“Can they do that?” some people might ask. After all, they’ve read that a true and factual late payment cannot be altered. That would be lying and illegal, right?

No, wrong.

Here’s the reality—the insider information I never see written up on credit bureau or government Web sites or in so-called helpful articles about credit. Late payments may—not must—be reported to the credit reporting agencies (credit bureaus). I’ll explain.

The Visa company owns my payment history information for their account. If they want to report that payment history information to all three credit bureaus, or to just one bureau, or to none at all—that’s their choice. There is no law that requires Visa to report my pay history to all—or even to any—of the credit bureaus. And if someone at the Visa company wants to give me grace and not report my one-day late payment, that is their prerogative. It’s not illegal and it’s not considered lying to forgive someone and call it good. It is allowed. If someone is 60 days late, they can choose to forgive it and call it good. It’s up to Visa because it’s Visa’s account.

So I call up the toll-free number and ask to talk with a supervisor about my billing statement.

“I’ve been a customer of Visa for many years,” I say. The guy looks up my record and quotes back the exact number of years.

I continue, “You can see from your records that I’ve never been late. I am your ideal customer.” I pause for a second. Come to think of it, maybe I’m not their ideal customer because I don’t carry a balance from month to month, so they never make their outrageous interest profit on me. Oh well, never mind that. I go on.

“I just now discovered that my Visa bill got missed this month. It was hiding on top of my refrigerator, and I didn’t know it. I would like to pay today by phone, but I would like some grace and not have a late payment reported to the credit bureaus. My credit is really important to me, and I don’t want my perfect credit messed up by this one-time mistake.”

“Just a minute, let me see,” he says. So I sit and wait. When he comes back on the line, he has good news. “No problem, Mrs. Warren. We’ll take your payment now, and we will not report the account as late.”

So I make payment; and sure enough, when I check my credit report later, I confirm that no late payment was reported.

I smile. I am happy with my Visa card company. And they have just strengthened their business relationship with a valued customer.

Innovative Method #1: Use Charm to Get a Goodwill Agreement

Any time you have an “uncharacteristic” derogatory item on your credit report, you have an opportunity to receive grace and have it deleted. Even if it’s more than one day late. Even if it’s already been reported to the credit bureaus. Even if it’s a collection or charge-off.

One afternoon, I was talking with a hard-working woman who farms in rural Washington State. Much to her surprise, she received a letter out of the blue saying her collection account was past due and needed to be paid immediately. It was for some ancient catalog order, and she wasn’t aware she owed money. I happened to be at her home enjoying a slice of homemade apple pie when the letter came, so I coached her on what to do; less than 30 minutes later, the collection account had vanished off her record. You, too, can do what she did. Here’s how:

1. Call the company and say, “I would like to speak with a supervisor who has the authority to make exceptions to your rules.” Make sure you go a level above the customer service representatives.

2. Explain that you had no idea there was a past-due account on your record. Be friendly and charming. Explain that your credit rating is very important to you and that you are in the habit of paying everyone on time. They can look at your credit report and see this is true. Obviously, don’t say this if it’s not true. If you have multiple accounts past due, skip this strategy and use another one.

3. Say you will be happy to pay what you owe, but first, you need to have an agreement that they will give you grace for this “one-time, uncharacteristic mistake.” That’s the magic phrase. Tell them you don’t want your credit rating ruined over one charge-off you were not made aware of. Now let me make an important point here...

Everyone has feelings, including the supervisor you’re talking to. Don’t say, “YOU never sent me a bill.” That’s offensive and annoying and won’t win you any points. This is a goodwill request, so you want to be amicable. Instead say, “I know it’s not your fault, personally, but I never received proper notice. Someone’s computer must have messed up or whatever.” See the difference and how the second statement is more likely to gain a goodwill agreement? If you’re dealing with the collection department of the original creditor and not an outside collection agency, you can even add, “I always like shopping at your store; you have the best such and such. I’m surprised this payment snafu happened, but I’m sure we can straighten it out now.” Set yourself up as being on the same team, working out the problem together. Don’t set yourself up as a pit-bull lawyer coming against them, ready to tear them apart. One woman told me she couldn’t get the cooperation of her creditor to remove her late payment, and I found out later it was because she swore at the representative, so don’t make that mistake.

In addition, if it’s a very old late payment that has been reported as being a collection or charge-off, it is very important that you don’t make payment until after you’ve received a written confirmation that your payment will be considered “paid in full, as agreed.” You can get confirmation by e-mail, fax, or regular mail; but make sure you get it in writing. Otherwise, if they “forget” or don’t bother to send you confirmation after they have your cash, you’ll have no proof that you paid in full per your agreement. Uncharacteristic mistakes can be—and are—forgiven. And why not? If a person has years of perfect pay history, why should a one-time mistake ruin their high score and their chances of getting the best financing? It’s common sense and common courtesy.

Innovative Method #2: Demand the Removal of Old Collections and Interest Charges

A gentleman named Don asked for my help in getting an old collection from a men’s clothier off of his credit report. I wrote a letter for him that got immediate results. The company was not only happy—they were eager to tell the credit bureaus to delete the collection from Don’s credit file. They also apologized and said they hoped he would continue shopping at their fine store.

Now that’s what I call a satisfactory resolution. Please note that there was no lying involved. I do not endorse lying. Here are the steps I took in writing a successful letter.

Seven Steps for Writing a Successful Letter of Demand

These steps are like a recipe or a road map for writing a letter that gets positive results.

1. I found the company’s Web site by typing the name into the Google search. Then I clicked on Contact Us to find the phone number and mailing address.

2. I called and asked for the name of the supervisor in charge of the Customer Relations department. I asked for the correct spelling of that person’s name and confirmed the mailing address. They were happy to assist and even gave me the department number to include in the address.

3. I wrote the letter addressed to the specific person in charge of customer relations. Always take this step if you want first-class success. Don’t be lazy and write “Dear Sir or Madam.” A letter written to a generic human like that might be tossed aside and ignored. Think of it this way: Which letter will you open first? The letter written to you by name or the letter written to “Resident”?

4. I was specific but short in telling the story of the nonpayment. And in doing so, I politely let them know it was their fault.

5. I reminded them that under the Fair Debt Collection Protection Act, I have the right to request and receive an explanation of a balance due before being reported as late—and that they were in violation of the law by reporting the collection to the bureaus before proper notification was given.

6. I reminded them the Fair Credit Report Act states I have the right to receive the following documents as proof of debt validation:

a. A copy of my agreement with the company

b. A copy of this agreement with my signature showing I agreed to the terms of the credit account

c. A copy of the complete payment history of the account, so that the exact amount of the debt can be determined and agreed upon by both parties

7. I proposed a reasonable resolution, which was that Don would pay the original amount owned, minus late fees and interest charges, after he received a letter of confirmation stating that (a) the collection was in error and requested to be deleted from his credit file, and that (b) the original balance minus the late fees would be considered “paid as agreed/paid in full.”

Then, just to ensure a satisfactory response, I ended the letter with a zinger. Instead of telling you what it was, I’ll let you see it for yourself as you read the following letter. I’ve taken out the name of the store because they cooperated fully, and I don’t want to disparage them.

Aggressive Method #3: Insist They Stand by Their Original Agreement

Once your collection is paid off, it’s more difficult to get the creditor to agree to remove it from your credit report. Before you’ve paid it off, they want some money. The collection reps get paid commissions or bonuses based on the money they collect, so there’s a lot of incentive to bargain. The mistake most people make is when the collector says, “Sure, I’ll remove the collection from your report when I receive payment.” They take the representative at his or her word without getting it in writing. Look at it this way: Joe (or Jane) the collector couldn’t care less about you, your circumstances, or your credit. Joe is on the phone for one reason only—to do his job and make money for himself. When he collects money from past due accounts, he gets paid, too. So that’s his mission. He will do what he has to do, which might include agreeing on a settlement and even agreeing on removing the derogatory account from your credit report. I used to visit collection companies every week to negotiate settlements and do business, so I happen to know something about what goes on there behind the locked doors between the customer lobby and the reps.

Sometimes collection agencies have incentives and contests as a way of keeping their reps dialing and talking to people who don’t want to hear from them. It’s a tough job, so the bonuses and prizes help keep them dialing for dollars, hour after hour.

Understandably, there is still a high rate of turnover in the collection business. A few months of calling people who yell and cry on the phone, and many of them are ready to quit. Collection companies are always looking for new hires to replace the people who got burned out or who acquired better jobs.

Here’s another piece of interesting information. The reps use fake names to protect their identities. Why? Because they don’t need some loose cannon who didn’t appreciate their phone call looking them up at home and threatening their life. So Joe the collector might call himself Jack Daniels or Jack Nicholas or Jack Abbott, depending on his favorite pastime. Some of them have a good bit of fun picking their pseudonyms. When I worked in subprime lending, I visited one large collection agency where they all took on names of celebrities, but that’s another story.

The important point is, the typical collection rep doesn’t stay at the collection agency very long, and he or she uses a fake name. So if you failed to get your verbal agreement in writing, you have a challenge on your hands. You’ll never do that again, right? But for now, you’ve got to deal with it.

Call up the collection company and explain that you’re not happy because you kept your side of the bargain by paying them money, but they have not yet kept their side of the bargain by deleting the collection from the credit bureau.

At this point, they’ll probably say they don’t do that because it’s their general policy; however, you know they make exceptions because they did for you.

So you politely explain that you know they don’t usually do that, but in your case, your rep—Jack or Joe or Jason or whatever his name was—promised you that when they received their money, they would extend you the favor of deleting the collection from your credit file. You explain that is the only way you would have agreed to pay, of course!—because as everyone knows, paying an old collection hurts your score and makes it go down when the “Date of Last Activity” is updated on your credit report. Therefore, you would never have paid it if you hadn’t also received an agreement—a verbal contract—to have the account removed from your file. And you checked your credit report recently and were totally shocked and dismayed to find out that their end of the bargain hadn’t been kept yet—and you want that corrected right now, today, because you aren’t going to stop pestering them about it until it’s done. After all, a deal is a deal, and an agreement is an agreement, verbal or written. Period.

Keep asking for a higher authority, a supervisor in charge, a company president, even the CEO, if necessary, and repeating your story until you get cooperation. Sometimes, one collection rep passes the phone to his friend sitting next to him, and he pretends to be a manager. Happens all the time, so don’t be intimidated about asking for a higher authority.

And then next time, don’t trust Joe the collector’s verbal agreement because you aren’t talking to someone who’s using his real name, and he probably won’t even be working there anymore by the time you have to follow up. Get your agreements in writing, right up front, before any cash exchanges hands.

For more in-depth, insider information about improving your credit, please see my Web site, www.MortgageHelper.com, and click on Credit Scoring.