Late Mortgage Payments Hit FICO Hard

late mortgage payments

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Late Mortgage Payments Hit FICO Hard

Late mortgage payments do serious damage to your credit score.  Here is how much.   Of course late payments on credit cards and auto loans do serious damage to your FICO score as well.  One late payment on a credit card signals that trouble is brewing.  That is another subject for another Essay.  For this Essay we will confine our discussion to the specifics of late mortgage payments.

FICO has lately become more forthright about the specifics of the damage done by late mortgage payments .   They have published the following examples.  Here’s your wake up call and it’s not pretty:

Very High Fico of 780

30 day late mortgage payments send it down a full 110 points to 670.  Time it takes to recover = 3 years.

90 day late payment sends it to 650.  Time it takes to recover = 7 years

Short sale with no deficiency balance sends it to 655-675.  Time it takes to recover = 7 years

Short sale with deficiency balance sends it to 620-640.  Time it takes to recover = 7years.

Foreclosure sends it to 620.  Time it takes to recover = 7years.

High FICO of 720

30 day late payment sends it down to 630.  Time it takes to recover = 2.5 years

90 day late payment sends it down to 610.  Time it takes to recover = 7 years

Short sale with no deficiency balance sends it to 605-625.  Time it takes to recover = 7 years.

Short sale with deficiency balance sends it to 570-590.  Time it takes to recover = 7 years.

Foreclosure sends it down to 570.  Time it takes to recover = 7 years.

Fair FICO of 680

30 day late payment sends it down to 610-630.  Time it takes to recover = 9 months.

90 day late payment sends it down to 600.  Time it takes to recover = 3 years.

Short sale with no deficiency balance sends it down to 610.  Time it takes to recover = 3 years.

Short sale with deficiency balance sends it down to 575-595.  Time it takes to recover = 3 years.

Foreclosure sends it down to 575.  Time it takes to recover = 3 years.

If you are still a little mystified about the seeming unfairness of some of this, join the club.

  The following observations may be of some help:
  • The first late mortgage payments are said by FICO to capture a good deal of the risk that the consumer now represents
  • FICO doesn’t tell us 100% of the ingredients in their “secret sauce.”  Their rational for this practice is that they don’t want consumers to be able to “game” the system with absolute confidence.
  • It is frequently said that a short sale hurts your score just as much as a foreclosure.  This may be true in some cases but the number of missed payments before the short sale took place certainly seems to be a factor. According to FICO a short sale has slightly less of an effect on the score than 90 days late does for those with scores of 780 or 720. They dodge questions on this point.
  • A short sale with no deficiency balance is very rare and would require the full cooperation of the lender in any situation I can imagine.  It all comes down to whether or not a “deficiency balance” is reported to the credit reporting agencies.
Always remember that rebuilding damaged credit is done by moving forward responsibly, not by ducking out of the system.

 

 

 

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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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