How much will a late payment drop my credit score?

Mortgage and Lending with Mutual of Omaha NMLS#: 274064

How much do FICO scores drop after a 30 or 90 day late payment on a mortgage?  

This question and many just like it are asked mortgage professionals everyday.  As much as we enjoy giving accurate and precise answers to many questions asked by borrowers who depend upon our professional knowledge and expertise, we are forced to give vague answers on this one.  Not because we want to be evasive, but because a specific answer is just not available.  

I did, however, come across a comment on another forum that gave a fairly specific estimate of the affect various late payments and even a foreclosure would have on credit scores.  

With permission, this is given by Tracy Becker, CEO & President of Credit Restoration and Education at North Shore Advisory, Inc.:

"In the last few years, Fico has disclosed more specific information about the damage to credit scores after mortgage late payments.

30 day late payment damage:
780 score drops to around a 670-690
720 score drops to around a 630-650

90 day late payment damage:
780 score drops to around a 650-670
720 score drops to around a 610-630

Foreclosure score drops:
780 score could drop to 620-640.
720 score could drop to 570-590.

As you can see the difference between a foreclosure and a 90 day late payment for a 780 Fico score is not much! This speaks to how risky a consumer with a recent 90 day late payment on their mortgage would be to a lender. The recovery naturally on these events would take years and in many cases close to seven."

Me again.  On the flip side of scores dropping due to negative or derogatory items, there are ways to estimate the improvement in credit scores by taking certain actions.  This is done through a "Credit Analyzer" or "What If Simulator" offered by many credit reporting companies.  In a few seconds we can run a scenario through the system and get the estimated score improvement - whether it be paying down a revolving account or opening a new one.  It allows us to pinpoint an action plan for the client to get to the credit score desires.  

Credit repair companies have their place for more complex credit issues, but many buyers can get what they need form a well-informed loan officer using the right tools.

Comments (2)

Randy Bocook
Keller Williams Coastal Area Partners - Richmond Hill, GA
Selling Coastal Georgia

Good article Doug. Some people do not realize how badly one late payment can really hurt your credit score. Thanks for sharing this information. Have a great 2013

May 14, 2013 03:01 AM
Annette Thor
Connecticut Homes and Commercial Fairfield Cty,CT - Westport, CT
Residential & Commercial Real Estate Broker in CT

Wow 100 points for 30 days-Thanks for the info Doug

May 14, 2013 04:23 AM