Do Past Late Payments On a Mortgage Affect Credit?

Dear CHM,

Late payments remain on a credit report for seven years, and will likely have some effect on credit scores and lending decisions for as long as they appear on the account. The good news is that the longer ago the late payments occurred, the less the impact will be. This is especially true if all your payments have been made on time since.

How Will Late Payments on My Mortgage Affect Me?

For most individuals, a mortgage is their largest debt. Because of this, delinquencies on a mortgage may impact your scores more than late payments on a credit card or other account.

If you know you may have difficulty making a mortgage payment, contact your lender before you become delinquent on the account. Doing so puts you in a better position to discuss options to keep your account current and minimize damage to your credit rating.

How Can I Improve My Credit After a Missed Payment?

The first thing to do to help your credit scores rebound is to bring any past due accounts current. Then make sure all your payments are made on time going forward. This includes not only your mortgage but all your other accounts as well.

Your payment history is the most important factor in credit scoring, but credit utilization is also very important. The second most important thing you can do to help your credit scores is to pay down debts and keep credit card balances as low as possible.

Your credit utilization rate, sometimes referred to as your utilization ratio, is a percentage that tells lenders how much of your available revolving credit you are currently using. The lower your utilization rate, the better for credit scores. Ideally, you should pay your credit card balances off in full each month. This helps prevent accumulation of debt and helps ensure you aren't spending money on interest fees.

Thanks for asking,
Jennifer White, Consumer Education Specialist