Your credit score can impact your life in multiple ways. It can help determine if you're approved for a credit card or a loan. In some cases, it can even affect if you're hired for a job. FICO credit scores range from a low of 300 to a high of 850. If you've had a slow pay, or late payment, on your mortgage, it will adversely affect your credit and may lead to a lower credit score.
FICO credit scores have five key parts, the largest of which is your payment history. How well you do or don't pay your bills accounts for 35 percent of your score. Thirty percent of your score reflects how much debt you owe. Another 15 percent is the length of your credit history. Ten percent is the types of credit you have, such as a mix of credit cards, installment loans and a mortgage. The remaining 10 percent reflects how many new inquiries for credit you've racked up within the last two years.
When it comes to slow pays on something like your mortgage, FICO looks at how many late payments you have, how late the payment is and how recently it occurred. Creditors often report late payments in 30-day increments. A 30-day late payment is bad on your score, but a 60-day late payment is even worse. The impact on your score will vary depending upon the other information contained within your individual credit report.
Your Credit Report
Slow pays are also slow to go away -- they can remain on your credit report for up to seven years. Furthermore, FICO will factor it into your credit score for as long as it appears on the report. FICO gives extra weight to recent payment history, so a slow pay does its most credit damage when it first appears on the report. It will have less of an impact as it ages, but that first hit will be significant.
Let's say you find out your credit report claims you have a slow pay in your past. If you know this isn't true, so you'll have to take action. Under federal law, your credit report can contain only accurate information. False and outdated information must be corrected or removed. Dispute the item immediately with the bureaus and keep at it until it's removed. You can file a dispute online at the website of the credit bureau.
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