There are different reasons why you might be late to pay your mortgage. First, there is the good old forgetfulness. If your mortgage isn’t set up for automatic payment, you might just forget to transfer online or write that check.
Financial problems can also prevent you from paying your mortgage on time. If you’ve recently lost your job, seen your income drop, or suffered a series of urgent expenses, you may have run out of money to pay your mortgage.
Unfortunately, even a single late mortgage payment could negatively impact your credit score, so it’s best to avoid having a late payment flagged on your file.
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The impact of a single late mortgage payment on your credit score
Generally, paying your mortgage a few days late will not affect your credit rating. Mortgages often have a grace period that varies depending on the loan. For some home loans, it’s 15 days, although your grace period may be shorter.
Either way, if you make your mortgage payment a few days after it is due, there shouldn’t be any negative consequences. It is when you are 30 days or more late on a mortgage payment that your credit rating can be damaged. How much damage are we talking about? It depends on different factors.
One thing that may surprise you is that the higher your score, the more impact a single late payment will have. In fact, FICO reports that a single late payment could result in a drop of up to 110 points on a credit score of 780, which is considered a great score. Meanwhile, a credit score of 680, which is considered good, can only drop down to 80 points for the same offense.
The main point to remember, however, is that being significantly late, even once with your mortgage payment, could seriously hurt your credit score.
How to avoid late mortgage payments
The best way to avoid being late on a mortgage payment due to an oversight is to automate the process. You can usually have your mortgage payment debited from your bank account on a monthly basis. If you want to write a check yourself, set up a calendar reminder.
If financial problems are preventing you from paying your mortgage on time, talk to your lender rather than ignoring your payment due date. If you’re having temporary difficulties, your loan manager may agree to let you pay off your loan that is a month late or accept a partial payment. In this case, your late payment will not be reported to the credit bureaus and your credit score will not be affected.
If you have to put your mortgage payments on hold for an extended period of time due to financial hardship, you can ask your loan officer to put your mortgage on hold. This could save you many months without having to pay your mortgage. Keep in mind that your payments will not be canceled during the forbearance period – just defer to a later date. But this way you can prevent your credit score from being affected by late payment or multiple payments.
Being late for any debt payment could drastically harm your credit score. Do what you can to avoid being late with a mortgage payment so that your credit score stays healthy and you don’t suffer negative consequences.