How Late Can a Mortgage Payment Be Before It Is Reported to the Credit Bureaus?
Technically mortgage payments are late if the payments are not received on the due date although most lenders allow borrowers a 15 day grace period before late fees are incurred. Late payments are only reported to the major credit bureaus (Equifax, Experian and TransUnion) if the borrowers are more than 30 days past due.
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FICO Scoring System
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Payment history, which reflects the ability of a borrower to make timely payments, accounts for 35 percent of a FICO score. No other factor has such a large impact on an individual's credit score. The payment history portion of a FICO score takes into account factors such as the number of late pays, the amount past due, the length of the delinquency and previous charged off accounts. High numbers of well managed credit accounts can help to offset one late payment.
Consequences
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Late payments, charge offs and bankruptcies can remain on credit reports for up to seven years. Any late pay has a negative impact on a score but small amounts and short delays are less damaging than large debts that are months late. Lenders report late payments at 30, 60, 90 and 120 days. The longer the delinquency, the bigger the impact on a score. When outstanding debts are settled, scores improve, but the history of the delinquency remains on file.
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Other Impacts
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Lenders can foreclose on the homes of people who fall behind on mortgage payments. Typically, foreclosure proceedings begin when payments are between 90 and 120 days late. Borrowers who make late payments often forfeit the right to a grace period, meaning they must pay future payments on or before the due date to avoid penalty fees. Other creditors and insurance companies check FICO scores when reviewing applications from new customers, and poor scores lead to high rates or declinations.
Consumer Rights
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Consumers can contest credit scores if creditors wrongly report information. People should first contact the creditor that made the error and ask for the creditor to notify the credit bureau of the mistake. If the creditor fails to do so, consumers can contact credit bureaus directly. Supporting documents are required when claims are submitted. Typically it takes up to 45 days for the bureaus to review disputes and make necessary corrections.
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