Late payments are not created equal; a 30 or 60 day late pay will not damage your score much, and can often be removed. However a 90 day or 120 day late pay will cause significant damage to your score.
You can remove a 30 or 60 day late pay by contacting the lender directly and asking them to erase it. Often they will do this as a gesture of good will and to keep your business.
A phone call and a letter including the reason is the most effective method. Also be respectful and nice to them because they do not have to remove this mark.
A 90 and 120 day late pay is much more difficult to remove. However if your account is still open then you should contact the lender, and ask for removal of the mark.
It is a good idea to make sure your account is up to date before making this request. Typically if the lender sees a history of late payments they will not remove it.
If the lender will not remove this item then we suggest you dispute it directly with the bureaus. This is done through a dispute letter; you can create it or hire a service to do it on your behalf.
The negative item will be on your report for a maximum of seven years. Your account will go to a collection agency after 180 days of delinquency.
The reason a creditor is able to remove this mark from your file is because they report to the bureaus monthly. Thus all they have to do is not report this negative mark, the next month.
If your account is not in good standing, it will be very difficult to convince the lender to remove the mark from your report. Also there is a lot of information that says a negative item must stay on your report for seven years.
This is not true; any item can be removed at any point in time, the maximum amount of time an item can remain on your report is seven years. There are a few exceptions such as a bankruptcy. The Fair Credit Reporting Act clearly says that the maximum amount of time is seven years. There is no minimum amount of time an item must stay on your report and can thus be removed at any time.
In sum if you can not negotiate removal of the mark directly with the lender you should dispute it with the bureaus. This is done through a dispute letter written yourself or by hiring a service to do it on your behalf.