What Happens to Your Credit When You Miss a Mortgage Payment — and How Can You Fix It?

Kelly Hernandez
An envelope that is rubber stamped "past due."

You can easily miss a mortgage payment for a number of reasons. You may have made your payment late or missed it altogether if you’re in the process of buying a new home or you haven’t set up automatic payment withdrawals and forgot about it. You may also have missed a mortgage payment if you were facing other unexpected expenses and simply couldn’t afford it.

Whatever the reason you have for missing your mortgage payment, it’s important to understand your options. A missed mortgage payment has negative effects on your credit score and can get you into trouble with your lender. It’s important to understand what happens when you miss a mortgage payment and the options you have to fix this mistake so your credit score doesn’t suffer for too long.

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What Happens if You Miss a Mortgage Payment?

A missed mortgage payment negatively affects your credit score.  The higher your credit score, the more dramatic the effect on it will experience. The number of points your score lowers depends on your current credit range, which may include one of the following:

  • Poor credit: A score 580 or under is considered poor and identifies you as a risky borrower.
  • Fair credit: If your score is between 580 and 669, you have fair credit. You may be approved for loans by some lenders but the terms may not be favorable.
  • Good credit: A score of 670 to 739 is good and about average. Some lenders will provide you with credit or loans with satisfactory terms.
  • Very good credit: You have very good credit if your score is 740 to 799. You’re likely to receive approval from most lenders and and your loan terms should be favorable.
  • Exceptional credit: A score above 800 is exceptional and you’re likely to be approved for high credit limits and large loans with satisfactory interest rates and other terms.

When you miss a mortgage payment and it’s reported on your credit, your score lowers. The number of points your score lowers depends on your current credit score and your mortgage terms, including the balance. When you miss a payment, your credit score can drop by 60 to over 100 points.

If you have good to exceptional credit, your score may drop more significantly than if you already have poor or fair credit. Without previous reports of missed payments, this missed mortgage payment is taken seriously by the credit bureaus and it can hit your score hard. With a lower score, you’ll find it harder when applying for credit or loan approval and lenders are less likely to offer you favorable terms when you borrow money.

When Does a Late Payment Appear on Your Credit Report?

Once your mortgage payment is 30 days late, it affects your credit score. At that point, it’s reported to the credit bureaus as a late payment and is recorded on your report.

If you’re only a few days late making your mortgage payment, submit it as soon as possible. You may be responsible for a late fee with your lender but it may not be reported to the credit bureau.

How Long Do Late Payments Affect Your Credit Score?

According to FICO, your credit payment history is one of the most important factors in a FICO score. When calculating your score, the credit bureau takes this into consideration as 35% of your creditworthiness.

If you make a late mortgage payment, you can expect for it to stay on your credit report for seven years. However, the more time that passes without additional late payments, the less of a negative effect it has on your score.

How Many Mortgage Payments Can You Miss Before Foreclosure?

If you’re late or behind on mortgage payments, you may be concerned about when the foreclosure process will begin. You must be at least 120 days behind on paying your mortgage before the lender can initiate foreclosure.

Once your lender begins foreclosure, it can still be several months before the sales process begins. The length of time from the initial start of foreclosure to the sale of your home varies by state.

Fixing Missing or Late Mortgage Payments on Your Credit Report

If you’re in trouble and can’t make your mortgage payment, contact your lender to discuss your options. Many lenders offer loss mitigation programs to help you stay in your home and get caught up on payments.

If you’ve taken advantage of these programs or found other ways to get caught up on your mortgage, ask your lender to rectify your credit report. If you’re in good standing with your lender, it may be possible to eliminate some of the derogatory marks on your credit report related to your late or missed payments. There are many strategies you can implement to afford your mortgage and repair your credit.

Mortgage Repayment Plan

Your lender may be willing to spread your delinquent balance out over the next few months, making it easier for you to catch up. To qualify, you must contact your lender and create a repayment plan agreement. Your lender may only agree if you’re at least a few months behind on your mortgage payments but can prove you’re financially able to make your payments now.

Late Mortgage Payment Forgiveness

If you have a relatively good track record of paying your mortgage on time and you only missed one payment, contact your lender. You may be able to get your late payment removed from your credit report if you ask your lender to do so.

Your lender will only agree if you’re caught up on payments. To ask for forgiveness, you may also be required to write a letter to your lender explaining why you missed a payment and that you’re back on track financially now.

Credit Score Recovery After Missing or Late Payment

You can improve your credit score after missing or skipping a mortgage payment, but you must develop responsible financial habits. Improve your credit utilization score by paying down your credit and loan balances. Keep your accounts current and ensure you’re making all payments on time to lenders and credit card companies.

Tips to Avoid Missing Mortgage Payments

When you create a personal budget, ensure it prioritizes loan payments, including your monthly mortgage payment. When you have a financial plan each month, it’s easier to know where your money is going and to stick with the budget. Your lender has mortgage insurance to protect itself against defaulting, so you should create a strong budget that protects you against foreclosure and other negative effects of missing a payment.

When You’re Always One Month Behind on Mortgage Payments…

It’s common for borrowers to remain one month behind on mortgage payments. While this may not lead to foreclosure, it has extremely negative effects on your credit. If you’re stuck one month behind, contact your lender and ask for a mortgage repayment plan. You can also analyze your financial situation and cut unnecessary expenses to catch up on your mortgage payments.

If you’ve skipped a mortgage payment or you’re late making one, it can be tough to catch up. Being late or behind negatively affects your credit score and ability to borrow money. It’s important to implement these strategies to get caught up and eventually improve your credit score.

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