75 Point Drop in Credit Score from 1 “Missed” Payment

| February 15, 2011 | 0 Comments
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This story is from a guy named Matt, who Jason and I went to high school with.  Matt is your average Staff Accountant working for a big company in the suburbs of Washington, DC.  He has owned a condo in Bethesda, MD, a nice area inside the Beltway, for about 3 years.  He doesn’t make a ton of money, but is responsible with his finances and was able to buy his first home at a pretty young age.  He pays his bills on time (he is an accountant, after all) and has always had a high credit score.

Not long ago, he had his credit pulled at a car dealership when he went to trade in his Jeep Grand Cherokee for a newer, nicer one.  “Oooh, I’m sorry sir.  We won’t be able to approve the loan.  Your credit  score is 625 and we need a 650 for this loan…” said the car salesman.  625?!  Matt has always had scores in the low 700s.  What the h— happened?

As usual, the answer was pretty simple and very unfortunate.  A 30 day late payment on his mortgage made his score plummet 75 points.  A late payment on his mortgage??  Matt pays all his bills on time, especially the mortgage.  I mean, that’s the first bill he pays every month.  So what happened?

Matt pays all his bills online nowadays.  It was a bit of a tough transition from the writing and mailing checks and balancing his checkbook every month (accountant, remember).  But once he saw how quick and easy online bill payments were, it was just a hard thing to pass up.  About 6 months ago, the bank where Matt has his accounts was bought by a large, national bank.  This is very common in the past couple years and typically isn’t a big deal.  I’m not going to mention the banks by name, but let’s just say you have definitely heard of them.  Now think about the massive amount of information that they have to transfer over to the new bank’s platform.  The millions of daily checks, debits, deposits and wires have to be perfectly transferred over to the new system—in real time, without missing a thing.  Of course, banks do this stuff all time and they do it better than anyone but still…mistakes happen.  In fact, this is easily the most difficult part of acquiring a smaller bank.  So for whatever logistical reason, many bill payments at the time of the transition were “missed.”  Matt’s mortgage payment was one of them.  Their records showed he made the payment, just 30 days after he actually did.  He was never notified of the error, continued making the payments, meanwhile the 30 day late payment was reporting to all 3 credit bureaus.  And a 30 day mortgage late payment is not a good thing your credit.  His score dropped 75 points in one day and he didn’t even do anything wrong.

After the trip to the car dealership that yielded no new car, Matt called Jason and me.  We are the credit guys, after all, plus we’re old friends.  We called our attorney at Lexington Law and he jumped on it.  This one was a little tricky though because they had to get the bank to change their reporting, not just complain to the credit bureaus.  Long story short-  the mistake was corrected and his score jumped back up into the 700s and Matt got his new Jeep and was able to stop freaking out.  Haha.  He does that sometimes.

So, anyway another case solved by Lexington Law and another good story for your friends at Credit Repair Life.

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