Does a Mortgage Payment Made During the Grace Period Affect Credit Score?

Credit scores are determined based on the information your creditors provide to the credit reporting agencies. Creditors do not report your payments as late unless your payment is a minimum of 30 days late. If your creditor receives a payment during your grace period, it has no effect on your credit score. You should mail your payment at least two weeks before the grace period ends, however, to ensure it arrives on time.

Scoring

The exact method of scoring is proprietary information, but all three credit reporting agencies are believed to use the same basic algorithm to calculate the credit score. The difference in scores among the agencies usually is due to the information each agency has in your credit file. Some creditors report payment information to all three bureaus, while others only report to one or two. Prior to the mortgage crisis of 2008-2009, a credit score of 640 typically was enough to qualify for a conventional mortgage loan. In 2011, you usually need a minimum score of 680, and some lenders require a score of 720 or more.

Reports

The three major credit agencies in the United States are Experian, TransUnion and Equifax. Everyone should review his credit report at least once a year. Congress passed a law requiring that each agency allow you to review a copy of your credit report once a year. You can get a copy of your credit report by visiting the AnnualCreditReport website and requesting a copy from one of the agencies. If you wish, you can request one from a different agency every four months, so that you have an opportunity to review each report once a year. There is no charge for this service.

Repairing

When you review your report, you will find a form to send to the credit reporting agency requesting that it correct any errors. If you detect inaccuracies, gather any documentation you have regarding errors on your report, and send the information to the credit agency, along with a cover letter explaining the situation. If the credit reporting agency confirms that an error exists, you should receive a corrected copy of your credit report from the agency in 60 days or less. No law at the time of publication enables you to obtain a free copy of your credit score. If there are errors on your report, you should not pay to see your credit score until the agency corrects the error(s).

Considerations

One payment that is more than 30 days late can have a major impact or your credit score. The credit reporting bureaus will lower your credit score as soon as your creditor reports your late payment. Furthermore, it takes several months of prompt payments to bring your score back to its previous level. One late payment can prevent you from receiving a mortgage or vehicle loan. If possible, send in the minimum payment or more as soon as you receive your statement. If you wait until the last moment and the mail is delayed, the credit bureau will not be sympathetic.