A single late payment on your mortgage or other credit account can lower your credit score by 50 points or more depending on your creditworthiness. It seems unfortunate that a one-time missed payment, perhaps even by accident, can have such long-lasting and detrimental impacts on your credit, but credit scores can also be rebuilt and improved over time.
Immediately Get Back on Track
Credit scores can change daily based on your outstanding balances, credit history and other factors. After a late payment, the best thing to do is to get back on track and resume making payments on time to lessen the credit score blow from your recent late payments. FICO bases a 35 percent of your credit score on your payment history. While this can work against you, it can also work in your favor as you continue to make on-time payments. Every on-time payment you make will help to repair your credit history. Not only will you have more on-time payments reflected on your report, but the older missed payment also will carry less weight than the more recent on-time payments.
Focus on Improving Your Credit Elsewhere
Since it is often impossible to escape the lower credit score from even a single missed payment, if you want to improve your score, look at the other items FICO uses to calculate your score. Thirty percent of your score is based on the level of your outstanding balances in relation to your available credit. This is often referred to as debt utilization ratio, and the lower it is, the better it is for your credit score. Pay down balances or perhaps even open new credit accounts where appropriate. You may not be able to fully offset the negative impacts from your late payments, but you can focus on improving your credit in other places.
Speak With Your Creditor
Depending on the circumstances related to your late payment, it may be worth speaking with your credit to try to get the late payment reference removed. Your creditor will not be able to falsify or arbitrarily remove the late payment comment, but if you can prove a payment was made on time, your creditor would likely remove the negative reporting item. This approach has a better chance of success if your late payment was an anomaly in an otherwise pristine payment history or the result of an error committed by your creditor.
Dispute the Item
The major credit reporting bureaus -- Equifax, Transunion and Experian -- have processes to dispute negative items on your credit report. If your creditor is not able to assist you, it may be worth the effort to dispute the late payment items. The dispute process is free and can take 30 or more days to complete, but it is possible the investigation conducted by the bureaus could work in your favor. If you can get even one credit report to remove a late payment or other negative item, you will see significant improvements in your credit score.
Wait It Out
Delinquent items and late payment comments remain on your credit report for up to seven years. After that, the items will be removed from your report and will no longer be factored into your credit score. If the above efforts fail to have the desired improvement on your credit score, take solace in knowing the late payment items will eventually be removed, provided you remain in good standing on your other credit accounts.
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