A good credit score is important for more reasons than just obtaining new credit. These days, it can factor into everything from landing a new job to getting the best deal on your insurance policies. It's more important than ever to avoid late payments on your mortgage!
A 100 point drop for one late mortgage payment?
It’s true. A single 30-day-late mortgage payment can cause your score to drop by as much as a hundred points. Credit scoring algorithms vary based on many factors, and in some instances, the damage may be even greater and last for years.
The Costs Accumulate
At the time, a single missed payment will cost you only a late fee, but the expense really adds up on your next loan or missed opportunity. Low credit scores typically mean a higher rate and cost. Higher rates can mean hundreds or thousands of dollars of extra expense over the life of a loan.
Missed Payments are Usually Unplanned
Usually, events beyond our control lead to late payments, such as an accident, illness, job loss or family issue. At other times, carelessness or a hectic life may result in a forgotten payment.
What can you do?
- Plan for the unexpected. Maintain an emergency cash reserve account equal to at least 3 months of living expenses or more.
- Automate. If you're prone to forgetting or don't have a scheduled time to sit down and pay bills, set up auto payments through your checking account or put a perpetual reminder on your calendar.
Little other than time will decrease the negative impact of a late payment, so prevention is the one sure remedy. If you don't already have a good system in place to assure timely payments and are not sure what's best, reach out anytime. We'll be happy to help!
Helpful Credit Resources
- How to Manage Your Credit Score
- How Much Can You Save by Improving Your Credit Score
- An Easy-To-Understand Guide To Your Credit Score and the Factors that Influence It
- Did You Know You Have Multiple Credit Scores?