Buzz
It's common knowledge that late loan payments can cause a decline in your credit score. What’s less clear is how much of a drop this can cause. This straightforward chart provides a general overview of how late mortgage payments can impact your credit score.
Consumer advocate Bob Sullivan, over at Credit.com, points out that the effect of a late mortgage payment on your FICO score might be more significant than expected. He refers to a statement from the Consumer Financial Protection Bureau, which claims that a $100 late payment on a credit line could cause someone’s score to drop from 780 to 680.
Mortgage payment research from FICO supports this. According to FICO:
FICO conducted a study simulating different types of mortgage delinquencies using three typical credit profiles of consumers with scores of 680, 720, and 780, respectively. These "representative profiles" were chosen because they reflected the credit characteristics (e.g., utilization, delinquency history, file age) typical of consumers at those score levels.
FICO's research reveals the extent to which credit scores are affected by various late mortgage payments and how long it may take to recover from the damage:
Although FICO emphasizes that the figures provided should be viewed as guidelines rather than exact predictions, their research shows that the estimates are surprisingly accurate. For more details, check out their post as well as Sullivan's article.
Photo by Kevin Fox.
