One of the first questions any client asks me before we embark on a rebuilding journey is:
How much does a 30 day late payment REALLY hurt?
This question has a tricky answer. It is true that 30 day late payments impact your score quite a bit. How much depends on what you credit file looks like. If you have a thin file, or any file with no negative information, 30 day late payments can destroy your score. It may lower by 100 points or more. I have seen it, or read it, many times.
But what if you already have a lot of negative information? Well, this is where it gets murky. While the late payment may not impact your score nearly as much, it will impact your ability to obtain new credit greater than it would the person with the overall clean file, because you have now demonstrated you have not correct they behavior that got you into trouble in the first place.
In addition, if you have a late payment, your other credit cards may lower your limits or increase you rates. Don’t believe me? Check my Macy’s AmEX card after it dropped 2500 dollars in limit after an oversight on another one of my cards.
As far as impact, you will lose all the points as soon as the late reports, and you will get approximately 92 percent of those points back after 2 years, provided all your information stays similar and you obtain no further late payments. You will gain most of those points back between 6 months and 12 months after the late payment reports.
So yes, 30 day late payments do really hurt.
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