One late payment can kill your credit score. Therefore, it is very important for you to be diligent and pay all your bills one time.
FICO gave a small peek behind the curtain at how their scoring model works and showed just how much mortgage delinquencies affect your credit score.
The example they gave drew attention to three different FICO scores on the higher end of the spectrum (680, 720, and 780) and how one late payment of 30 days affected each score.
According to FICO, the impact of a 30-day late payment on a consumer’s mortgage varies greatly depending on how high the consumer’s credit score already was.
How One Late Payment Can Hurt Your Credit Score
Here’s how much one late payment can hurt your credit score depending on your current credit score:
- People with a 680 saw their score drop to 530.
- People with 720 saw a drop down to 525.
- People with 780 saw their credit scores drop as low as 620.
How Long It Takes For Your Credit Score To Recover After A Late Payment
Most consumers probably already know it ll take a while for their credit scores to bounce back. However, here’s how long it will take for your credit score to recover after one late payment.
- It takes a 680 up to 9 months to recover.
- 720 scores can take up to 2.5 years to recover.
- 780 credit scores take 3 whole years to fully recover.
Interestingly enough, consumers don’t lose more points for going forward with a short sale; the impact to their credit scores is just as bad as an outright foreclosure.
Don’t Let One Late Payment Kill Your Credit Score
As you can see, the higher your credit score already is, the more you have to lose. Missing a payment hurts high credit scores the worst and it takes longer to recover.
Indeed, their scoring methods almost remind me of how I was graded in high school. You had to work hard to achieve and maintain an A+ in class. However, the minute you slipped up and missed an assignment, your grades began to fall. You are left to fight a long, uphill battle to get your grades back up.
Similarly, those with the highest credit scores get hit the hardest by slipping up on something as seemingly innocuous as missing one payment date. Just look at the 780 score. One late payment means losing as many as 160 points. Further, you will have to wait up to 3 years for a full recovery!
So what have we learned? Every little detail matters to your credit history and scores. Don’t slip up!
If you are looking to refinance a mortgage, get a car loan, borrow money for school, or get a job, it is imperative that you not only know your credit score. Further, also verify your credit report is free from errors. Studies have shown that roughly 30% of all credit reports have errors.
Related: Ranking Debt Types From Best To Worst
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I just checked GoFreeCredit.com in your post and the banner and it is pretty good. Thanks for the recommendation!
I knew all along. Last night, my husband was shocked that he have three late fees on his mortgage payments but all of this are not true when we were ready to buy a new vehicle. We never paid late on our mortgage payment and I checked my bank to see if we have any late payments for more than 5 years and I showed everything are perfect on time. I have to dispute all of three credit bureau and proof that we do not have any late payments! How long it will take off on my husband’s credit report? His credit score is 637 but we know we had 782 credit score.
7 years unfortunately.
I’m battling with PG&E now over a $7 late payment I had no idea was due!
https://www.financialsamurai.com/2012/04/04/corporate-greed-by-pge-killed-my-friends-wife-and-my-credit-score/
My credit score was 714 and out of 4 years I was late one time and my score went down to 636. I was so angry at the credit card company for turning me in to credit collection for being late one time. The bad thing is I didn’t even get the bill that month I only got a letter from
Collections. So I got punished because of them. :(
Ouch. I feel your pain! I’m sure obviously you would have paid had you known!
There was a bug in my bank’s autopayment software that resulted in a $5 credit card bill going unpaid for 30 days. My credit score is still under 700 two years later–it was over 780+ before that.
So If I mailed off my House payment, now with it being due on Feb 1st and Todays the 16th.. will that affect anything at all? Or do they consider 30 days late the cut off mark?
it is no surprise that the higher the score is to start with, the greater the impact of negative information. This is how the risk formula propogates itself as accurate. Lenders don’t have to lend, when they do they want zero losses. sadly the fico model can be miles off which excludes borrowers 30% of which are actually sound investments, since they are not lent to; the banks dont lose and the fico model does indeed protect lenders. “doesn’t mean it’s accurate”
And what if the bank said i have 180 days of $0 payments in my mortgage and I HAVE ALL THE BILLS?????
I missed a payment on my student loan i just paid today. it was 38 days past due. Will this effect my credit score as much as missing a mortgage or a credit card bill. This was a complete oversite and i have excellent credit. I could kick myself in the butt.
This sucks! My average monthly credit card spending is 4K which I always pay off in full. And then, I missed a $75 Macy’s card payment by more than 30 days (I can swear I paid it on their site and didn’t even know that I had missed a payment until my credit monitoring service notified me on the change in status!) and got dropped from 760 to 680. I am planning to buy a house next year, but seems like I will have a tough time now with my new credit score. F*%# Macy’s!!!!
Wow, that is pretty bad NR. You should bring it up with Macy’s and ask them if they can do something about it. Your rate could literally be 0.25-0.5% higher. That said, if you can probably get it back in a year imo.
Thanks for your advice Financial Samurai. I spoke with Macy’s and they are contacting the credit bureaus to retract from the earlier missed payment notification. Keeping my fingers crossed!
Good stuff NR! Best to you. And call me Sam. Samurai is too formal.
Just wante dot report back Sam that my credit reports have been updated. New score – 769. :)
That’s huge! Well done!
Who did you contact? The same thing happened to me over a $13 purchase and they will not remove the 30 day late.
It’s weird how everyone just accepts this ridiculous practice, ‘Oh boy I better not screw up’ ‘I’ll never be late now’ blah blah blah.
There is not a single voice that says, ‘That is an absurd practice, let’s protest or even just get angry instead of just rolling over.’
I was about to lease a new car. Checked my credit and found that I missed a $21 payment in the mail. My Score dropped from 790 to 648. It took me 11 years to get that score up there from the low 500s when I finished school; five years to get from the mid-600s to 790. I’m devastated. Maybe even suicidal. No wonder there are all those people camped out on Wall Street. Too much of one’s life revolves on unforgiving and secretive financial mechanisms. That I made six figures last year for the first time in my life means nothing, nor that fact that I’ve never missed a $600 student loan payment nor have I ever missed my $3400 mortgage payments, but a $21 accident sinks my entire financial reputation? WTF America? (and I’m a veteran too.) This country is going down hill….deservingly so.
I AGREE…LEGISLATION SHOULD REQUIRE CHANGES TO THE CREDIT SYSTEM…OTHER COUNTRIES OPERATE ON DIFFRENT SCORING SYSTEM…HERE IT IS JUST A SCAM. MY CREDIT SCORE FLUCTUATES 30- + OR MINUS A MONTH. mAKE A LARGE CREDIT CARD PAYMENT IT GOES WAY UP. MAKE A SMALL PAYMENT IT DROPS. NEVER MISSED A PAYMENT NOR HAVE EVER BEEN LATE BUT DO NOT HAVE A MORTGAGE. I GUESS I NEED TO GET AN UNDERWATER MORTGAGE AND THAN MY SCORE WOULD SKYROCKET. BANKS DO NOT WANT HIGH SCORES SO THEY CAN MAKE MORE MONEY CRIMINALS. WHEN I NEED SOMETHING I MAKE A LARGE CREDIT CARD PAYMENT AND MY SCORE JUMPS. CRAZY.
I agree with you! one $30 missed payment ends up costing thousdands in interest for mortgage or car loans! The credit score is for the lenders and anti-consumer. Thats why income and other history dont matter and its far easier to drop your score than raise it!
After ruining my credit during my college days i began trying to fix it several years later. i started at about 530 and it took me 7 years to get to 780. I went on a long 2 month vacation, and during that time i accidently let a payment slip for 50 dollars. my score dropped to 670. Here i am 6 months later and now my score is 695. Seems like you are penalized heavily for minor mistakes and not rewarded much at all for doing the right thing.
Wow, that slippage seems overly harsh to me. Perhaps it will rebound quickly. Most folks don’t need new credit every 6 months, so hopefully you will be fine.
Sam
This is very upsetting to read about. Without my knowing, my parents opened loans and a credit card in my name and defaulted on payment up to 90 days. I don’t know what my credit score was before but it is now in the mid-500s. They are now making payments diligently and I am looking at having to just pay off my mom’s credit card in my name to get it off my record. Does anyone know how long it may be until I can get back to a reasonable number? I am only 23 so it’s not a big deal now but I of course am concerned if it may take more than 5 or 10 years for it to clear up.
I just checked my credit after a mess up with my bank. They said they never received my transaction. I had excellent credit and now I’ve been docked at least 120 pts. I feel sickened because I spent the last 7 years of my life building this credit and now this is ruined. Why is the system set up to punish those who do everything right. With this bad economy they’ve really set up a system where most people will eventually just say…. screw it.
This is such an important post! So often people blame the aspects of a credit score that are far less heavily weighted for their deflated numbers. For example, someone deep in debt and who has a horrible payment history is worried about what a debt management plan or an inquiry will do to their score.
Those are startling drops just for being late on one payment.
I guess always paying on time is your insurance things will stay on track with your credit. It may lead you to be anal about due dates, etc. but it’s worth it.
Get a backbone Jerry!
I was just wondering this myself as I just opened a shutoff notice for my cable bill. We had been on auto-pay and forgot to update the credit card on file and I was wondering if it would do any harm. Apparently so. I haven’t actually checked my number in a long time. I should do it.
I would not have thought that your credit score would drop so far with just one missed, or late, payment. Of course, I am not going to experiment to find out.
Wow I didn’t realize it could impact scores that much. I’ve been pretty good at paying bills on time but will definitely be really careful about it now.
Wow, this is extremely useful information. I’m usually pretty good with paying on time, but I’ve had a few credit card bills slip (only to pay them off the next day!) Granted, that’s not a mortgage, but still… I didn’t realize how many points you’d drop for one late payment. My credit score is ok right now but I don’t have anything that really builds credit that I’ve purchased, maybe it’s for the best with the risk of missing a payment!
Whoa! That’s a huge hit. I personally know someone who is going through a short sale (a terrible option in my opinion) and had to miss one payment to proceed with this type of sale. They are already talking about buying a home within a year of the sale. I’m afraid they will be sorely disappointed by how much their credit will take a dive. I think I might need to write a follow up post on this, hmmm…..
Wow-This one really shocked me. I am obsessed right now with keeping our credit score REALLY high as we will be taking out a new mortgage in the next sixth months. I am going so far as paying off the credit card 2 weeks early and keeping the balance really low. Even if you pay your card off in full every month, I think having an unpaid balance show up can hurt!!!! I am actually checking several times per month to make sure I didn’t miss paying a bill! I can see my persistence is not irrational :)
actually having a small balance report seems to help your Fico score for some odd reason. Supposedly there are les than ten variables that raise your Fico and about 100 that can negatively affect it. No one truly knows because Fair Isaac does not release that type of information
The last paragraph that starts “So what have we learned?” should continue “Don’t be so dependent on the credit industry that any of this matters to you.” :)
Very informative post, didn’t realize the higher your score, the harder the fall!
Wow, that was an eye opener! The surprise was how one missed payment can affect your score. I never paid much attention to my actual score, because I handle my payments very well. Roughly 25 years ago, a department store reported that they wrote off a balance on my account. I disputed it since I had not moved and I always paid my bills, but it took six months to fix it.
I believe a 30 day late is Considered an R1. I’m actually surprised by those numbers, seems just a tad bit exaggerated. However, it’s really difficult to say if those numbers can be indicative how one late payment can kill your score. There are so many different variables that are considered. (Amount of Available Credit, Length of Credit History, Other Tradelines, Etc). But this is definitely an eye opener to everyone to keep your credit report intact!
I hear people talking about what affects credit scores all the time… this is a good piece of info to have! There is a lot of misinformation out there. What is even more shocking is that the impact to someone with a 720 credit score is WORSE than someone with a 680 credit score…go figure.
I missed a $9.99 charge on a low use credit card that was for some magazine subscription service. reported as 30 day late went from a 795 to a 726. took 6months to get back to 763 and stuck at 769 1.5yrs later but I also added some new accounts in that period.
FICO is truly a scam and they have sold the world into drinkng the kool aid, everyone from cellphone companies to utilities to employers pull credit reports and each hard inquiry is a negative according to the fico formula and penalizes your score but u can’t get any credit without a hard inquiry these days. Many banks will pull your credit simply to open a savings account which is silly.
Useless I what credit bureaus are. Just shows me how detached financial institutions are. They are to damn lazy to check you out, so they rely in the credit bureaus. America is debt driven. If you are debt free and pay your bills on time for years, you are considered a bad risk because you have no credit card or bank payment! This is a borrow and pay society. We are encouraged to be in debt! Look at the U S that owes trillions to China. Real smart. You should follow the country’s lead and be in debt also. What a bunch of B S! I say abolish the credit bearues, they control your life and love negative reports. Reports indicate that up to 79% of the credit reports are inaccurate.They make more money on lower scores because these usually are pulled more often. Can you see the dollar signs dancing in the eyes of the credit bureaus? Ever notice that there’s no positive cable or utility reports? Only negative ones show up. Where’s the credit for rent you’ve paid on time for years? I say @&# the credit bureaus. We are all their prisoners.
i have heard that rating agencies and lenders are becoming a bit more realistic / sophisticated in reviewing credit risk where they are now looking for patterns rather than one offs. whereas 1 missed payment could have hurt more some time ago, today the damage may not be as severe. they also look at the amount from what i have heard. i agree however that one should never miss a payment to begin with
The comment from Sunil is 100% incorrect! I have had zero missed payments on my mortgages for over 25 years and always pay off my credit card balances on time and have always had a strong credit rating. This past summer I under paid a mortgage payment because the mortgage company increased the total payment because of an escrow miscalculation on their side. I underpaid (auto payment monthly) by $40. They rejected the entire payment (but only after they took the payment in and then sent me a check back…WTF?) By the time i was notified, they already had sent a missed payment notice to the credit companies. My record shows 1 blemish in over 25 years of making payments and that was enough to drop my score, plus put a note in my record of a missed payment…shortly after that i was denied a refinance for my home because of this one blemish…THINGS HAVEN’T CHANGE MUCH FROM MY VIEW!!! Best advise…don’t miss a payment!!!!!
Steve – my comment was based on information I have heard from perceived experts who are perceived to know much more than you and I combined. I don’t have personal experience with what I have heard and nor do I want to. From a logical perspective it makes TOTAL sense. However like I said, I do agree that one should never miss a payment.
Or get a backbone!