30 days late can equal 100 off FICO

30 days late can equal 100 off FICO

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30 Days Late Can Equal 100 off FICO

30 days late can result in 100 points dropping off your FICO.  Why is the penalty so severe for one slip up?  That one late payment screams trouble to the computer.  You either can’t keep your promise of payment or it was not important enough to remember.  Either way no one will want to extend you more credit until you prove it was not the first sign of bigger trouble ahead. You have worked so hard to get where you are with your credit score.  You are rightfully proud of the results of your hard work, sacrifice, discipline and planning and now this.

This is why I stress that it is critical to always make the minimum payment on your credit cards at the very least.  Even if that minimum payment means you are doing little but treading water it still shows up as a compliant month in your reports.  Don’t ever hesitate to seek a good will exemption from the late hit if you get one.  Credit Card issuers will usually grant the good will exemption to good customers and maybe even waive the late fee.  Some credit card companies will waive one late fee per year.  Over limit fees seem to be a thing of the past.

To lose 100 points the FICO must be at least a sterling 780 to start with. 30 days late can equal 100 off FICO from a very high start. A lesser but still very good FICO of 720 will lose less. This is because there are fewer points to start with to lose.  An average or below average FICO will lose even less although it is still losing approximately the same percentage of its total value.  So why can’t I just publish a table showing you exactly how much this drop will cost the consumer off their credit score at each value?  Here’s the part not everyone understands about credit scoring:

30 Day Grace Period for Credit Cards

Credit card companies don’t report late payent of less than 30 days but Auto lenders have different policies!  Many times auto lenders will report payments late by as little as 14 days.  You should check with your auto lender to find out the specifics on your auto lenders late payment reporting policy.

Credit Scores Have Variable Components

A credit score is a complex formula designed to predict the risk of a consumer defaulting on a loan. It has a lot of moving parts. Much of the credit scoring process seems unfair. I personally know of one case where a person came out of prison after serving a rather lengthy sentence and found to his amazement that he had a good credit score.  Why?  His negative entries had been deleted because of age while the average age of his accounts had increased during his time behind bars. The only thing really fair about credit scoring is that it operates the same way for everyone.  It doesn’t discriminate in the sense of racial, political or sexual orientation.  It doesn’t care if you are pro or anti guns or abortion.  It does in a sense discriminate in favor of older people.

Why do I say this?  The average age of your accounts is an important component of your score.  If you are older and have kept up your accounts properly you will score a home run in this category.  If you are young you haven’t had time to build up longevity in this category.  You very well may be just as responsible as an older person. There is a ninja trick to add age to the average age of accounts category.  You can “piggyback” by becoming an authorized user on an older account held by a friend or relative.  If you are lucky enough to have such an option available to you make sure the balance is kept low relative to the credit limit.  Tell the person who may be kind enough to do this for you you don’t even want to have the actual credit card. Otherwise you have to try to make up for the lack of age of your credit history by shining in the other 4 key factors.  Those other 4 are:

  • Types of credit
  • Ratio of debt to available credit
  • Payment history
  • Recent inquiries

30 days late can equal 100 off FICO if you can get yourself to a very high point.  You will never get that high score with late payments setting you back.  If you do make a late payment and you can’t get it deleted with a good will adjustment get yourself back on track as soon as you can.  The passage of time will lessen the negative effects of the late payment with continued good behavior.

 

 

 

 

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After practicing law for 37 years Edward F. St. Onge, Sr. now devotes all his time to helping consumers achieve a high credit score with amazing speed. Learn the counter-intuitive secrets to credit scoring through his down to earth instructions backed by extensive knowledge of the laws and trends. All of the latest tricks and techniques that they don't want you to know now at your disposal. At last a level playing field for the consumer!

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