How Will Being Late on a Mortgage Payment Impact My Credit?

Failing to pay your home loan on time could have serious consequences.

Sometimes, even the most financially responsible people fall behind on bills. If you're late making a mortgage payment, you might think it's no big deal, especially if you've been current up to now. But you may be surprised at what a single late mortgage payment could do to your credit score.

Late fees and so much more

Generally, mortgage payments are due on the first of the month. If you're a few days late paying your mortgage lender, that's usually not a big deal. Most home loans come with a grace period of 14 days or so. So you have time to make your payment before you incur a late fee. Beyond that grace period, though, you could face charges for paying late. The specifics of your grace period and penalties will depend on the terms of your loan.

But a late fee isn't the only consequence of not paying a mortgage on time. If you're more than 30 days late with that payment, it could immediately damage your credit score.

In fact, if your credit score is strong and you're 30 days or more late on a mortgage payment, your score could drop by as much as 100 points. That may seem shocking, but your payment history, which speaks to timeliness in paying the bills, is the single most important factor in calculating your credit score. One bad move on your part could really have an impact.

Ironically, the impact will generally be less severe if your score is lower. But for people with strong credit, a single late payment can inflict a greater amount of damage.

Worse yet, a late payment will stay on your credit report for seven years following the incident in question. During that time, you could struggle to get a new loan or credit card. And, it could impact your ability to refinance your mortgage should you choose to go that route.

Imagine you have a credit score of 800. You're late with a mortgage payment and your score gets knocked down to a 705. That could spell the difference between snagging the best rates on a refinance versus rates that are just okay.

How to avoid a late mortgage payment

Sometimes, late payments are down to human error. You can avoid that by setting up your mortgage payment to get automatically deducted from your checking account every month.

If you don't have the money to pay your mortgage, well, that's another story. In that case, reach out to your lender to talk through your options. If you're dealing with a temporary hardship, your lender might agree to give you more time to make that single payment. Or, your lender might agree not to report you as late to the credit bureaus if you make a partial payment.

In some cases, you may be eligible to put your mortgage into forbearance, which would allow you to hit pause on your loan payments without being counted or reported as delinquent. (Right now, many homeowners are taking advantage of forbearance as part of the CARES Act, which is set to expire at the end of the year.)

Remember, being a couple of days late with a mortgage payment is generally not such a problem (though it's not a great thing to make a habit of). Once your account hits the 30-day mark, it's a reportable offense that could significantly damage your credit score. Set up your mortgage to autopay so you're not flagged as late due to forgetfulness. And always talk to your lender if financial difficulties put you at risk of not paying on time.