How Does A Missed or Late Mortgage Payment Affect My Credit Scores?

A mortgage account on a credit report is one of the most important and most impactful accounts that a credit report can have. If you think about it, a mortgage is probably one of the most serious credit accounts that you will ever have so it makes sense that this account affects your credit report pretty significantly when there are late payments on it.

When Is My Mortgage Payment Late? What Happens To My Credit Credit Scores?
A typical mortgage payment is due on the first of the month. The lender gives you a 15 day grace period where you can get your payment in with no penalty or negative marks on your credit report. Once you go beyond 15 days after the first of the month you enter a penalty period. Making your payment during this period, which goes up to the end of the month, requires that you pay a late fee in addition to your mortgage payment. Again, if you make your payment during the penalty phase your credit will not suffer.

But…and this is a big BUT – go over 30 days late on your mortgage payment and your credit will suffer. It is possible for your credit score to drop up to 100 points with just one missed payment. If your credit balances to your credit card limits ratios are small (little debt to higher limits) then chances are the impact of a late mortgage payment will be most likely closer to a 50 point drop. But there is no way to tell for certain exactly how much your credit scores will drop if you are 30 days or more late on your mortgage payment. Miss a payment by 60 days or more and watch your scores really drop.

Missed or Late Mortgage Payments And Future Mortgage Qualification
If you have a late payment on a mortgage account this will impact your ability to get a new mortgage for either a new home purchase or a refinance for several years. While it might not prevent you from getting a mortgage it will make an underwriter look very close at your file to make sure that you are not a high credit risk on the new mortgage. Typically a late mortgage payment will definitely impact an underwriting decision for 2 years with a Fannie Mae or Freddie Mac conventional mortgage and for 12 months with an FHA mortgage.

The Exception At Least For Now – FHA Secure
The one exception to this rule about missed payments and future mortgages is associated with the FHA Secure program. This program will overlook your missed or late payments if you qualify for this loan program. This program was launched in 2007 to provide a loan refinance option through FHA for non FHA adjustable rate mortgages that have adjusted or are set to adjust over the next few years. See What Is FHA Secure And How Do I Qualify?