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Topics addressed on April 28, 2010:
Impact of missing one mortgage payment
I admit I was late on one mortgage payment in 30 years, and my credit dropped 52 points. Is that normal for the credit industry, and am I stuck with that for seven years on my credit? Is a dispute allowed on this or not?
Your credit scores will be negatively affected by a late mortgage payment. The number of points depends on your overall credit history and the scoring system used by the lender. That 52 points may not be as bad as it seems.
The real issue is not the total number of points the score changed, but rather where the total you now have places you in the “range of risk” on that scoring system. If you had a great credit score before missing the payment, you would likely have qualified for the best loan terms, and you may still qualify for the best loan terms even after a 52 point drop.
So, rather than worrying about how many points your score fell, look at where your current score places you in terms of risk. Even though 52 points sounds like a lot, it may be meaningless in terms of your ability to qualify for the best loan terms.
The late payment will remain in your credit history for seven years, but there are a couple of things to consider that make that a less intimidating prospect. First, the older a late payment becomes, the less impact it has on credit scores. Second, the fact that you only missed one payment is much less negative than if you had fallen two or more payment behind.
Credit scoring systems reflect patterns of behavior. It’s the habit of not paying on time that will really hurt you, not a rare stumble along the way. If you continue to use credit and demonstrate that you are managing it well, your scores will begin to climb back up.
After a short time it will become clear that the late payment was an anomaly in an otherwise pristine credit history.
Thanks for asking.
- The "Ask Experian" team