A Day Late and a Credit Score Short

Whether you are the type of person who flies by the seat of your pants or the diligent planner, paying your mortgage on time can have a huge impact on your credit score.  But would it surprise you to know that the one who takes the bigger hit is the one with the higher FICO score?  There is nothing worse to someone’s score more than missed payments and they are also the one thing that takes the longest to recover from.  35 percent of what makes up your credit score is your payment history.  So let’s say your score is about 680.  If you routinely pay your mortgage late, your credit score will go down, for example anywhere to 600 to 620.   If you do qualify for credit, you will have to pay higher rates on just about everything from your mortgage, car loans, insurance, etc.  You finally turn things around and start to pay your bills on time.  It will take a while, but generally speaking it could take you around 9 months of consistent on time payments to bring your score back up to 680.  But what happens when you are on top of your payments and then something happens?

You have good credit because you pay all your bills on time.  So let’s say your credit score is from 720 to 780 points. Unfortunately, one month something came up and you pay your mortgage 30 days late just one time.  Your score could drop to between 630 to 670 points.   Hard to believe, but those who are on time seem to be punished the harshest for a late payment.  Even harder to believe, to restore your score after consistently paying on time could take 2 ½ to 3 years to bring your score back to the respective levels of 720 to 780. According to researchers, who conducted just a study back in 2011, generally speaking, the higher the score prior to the delinquencies the longer it takes for someone’s credit score to fully recover.  This is a harsh reminder to keep your accounts current and pay all your bills on time.