FICO Score Rebound

May 25, 2016 9:52 AM

How long does it take a FICO score to recover from a 60-day delinquent report, why has my score's recovery stalled, how can I speed up it's recovery?

Last summer, due to a new baby and work stress, I forgot that I put a less than $50 charge on a little used credit card and then didn't pay it for 2 months. So my previously over 800 FICO score took a huge nosedive. I have a semi-urgent need to refinance my house this summer, it looked like my score would get over the magic 740 number by mid-summer but then the recovery stalled out. I've posted an image from a free tracker linked with another card which should be close enough to the real score.

Does anyone have enough knowledge of how the score is calculated to know if I will be flatlined here for a long time? Is it ever worth calling the credit card company and asking them to remove the delinquency report based on the small amount of the debt and the long time I have held the card? How about disputing it, I have only heard folks having good luck with that on a legitimate delinquency when a debt is quite old and the records are perhaps not readily accessible to the card company. I definitely was late by 60 days in that payment just last summer.

Is there any other steps I could take to jump my score by about 30-40 pts to get above the threshold?

posted by no1hatchling to Work & Money (16 answers total)

In my experience (with exactly the same kind of issue, damn you Gap Card), yes, it will stay that way for a long time. It won't *hurt* to call the credit card company but I don't know that it will help.
posted by mskyle at 10:00 AM on May 25, 2016

It will likely affect your credit score for about a year and a half. See page 6.
posted by Candleman at 10:15 AM on May 25, 2016

You can also send a letter to the credit agency asking them to substantiate the charge. Depending how lazy everyone is feeling that might make it go away.
posted by bq at 10:17 AM on May 25, 2016

I had a delinquency like this on my credit report and sent a letter to the mortgage company explaining what happened on my otherwise stellar credit report. It helped me with my mortgage. Maybe it would help. You could ask your broker or lender about that as an option. Otherwise those dings sit forever and then poof there gone.
posted by cairnoflore at 10:23 AM on May 25, 2016 [1 favorite]

If you had a good experience with your original lender, going through them again may get you some leeway.

Without wanting to be too much of an unsympathetic jerk, the system is working exactly as it's supposed to. I would encourage you not to commit fraud by disputing it, as while there's likely no effect to you if you are caught doing it, it serves as ammunition to make the process worse for everyone, negatively affecting people with legitimate problems.
posted by Candleman at 10:38 AM on May 25, 2016

I had a mishap similar to this. I didn't see this was on my report until YEARS later, but then I didn't really need my credit score to be anything. When I saw it, I called the lender and since the debt had long since been paid, they had that notation removed from my report. Two months later, it was gone, and accordingly my credit score went up.

If you've paid the debt in full and have no other charges pending with them and are in general good account standing, it certainly won't hurt to call them up, explain exactly what happened, and ask if they can help you out. They may say no, but it might also be in their interest to say yes. But asking is definitely something people do all the time.
posted by zizzle at 10:54 AM on May 25, 2016

Knocking balances down on your other cards will help, but if you're planning to refinance I'd be very careful.

A score under 740 will not wreck your chances of a refinance. It may give you a slightly higher rate, but them's the breaks.

However, if you spend all your savings to knock down the debt ratio in the hopes of getting the score up you might have a whole different problem when you reach underwriting. Banks want to see that you have 4-6 months of payment in liquid savings, and it can't be money that suddenly showed up in your accounts.

So tread carefully, or at least talk to some mortgage brokers and get some advice.
posted by JoeZydeco at 10:57 AM on May 25, 2016 [2 favorites]

It will likely affect your credit score for about a year and a half. See page 6.

Note that that report is for an alternative score called VantageScore, not FICO. I agree this will affect the FICO score for at least that long, though - delinquencies can stay on the credit reports for 7 years, so they may play some role in your score for at least that long.

Knocking balances down on your other cards will help...

This is true, and just to add some detail: one of the factors in your score is your ratio of credit used to credit available. So all else equal, you would benefit from carrying a zero balance on all your cards, besides just paying all the monthly payments on time. As JoeZydeco points out, though, you should also have enough cash on hand to make several months of mortgage payments when you apply to refinance, so balance those 2 factors.
posted by Joey Buttafoucault at 11:05 AM on May 25, 2016

Best answer: I would call the credit card company and ask nicely to get the delinquency removed.

I had a somewhat similar situation occur with a store-specific credit card (I rarely use the card, so I don't have automatic payments set up, I thought the payment had gone through online but apparently I hadn't hit the final button to authorize it, it was such a small amount that I didn't notice that it hadn't come out of my bank account, so I had no idea until I got a bill saying I was 30 days delinquent, and it was already reported and reflected on my score.) I called up, spoke with someone and asked if they could have it removed, explaining the error (and taking the blame for it myself). The first person I spoke to transferred me to someone else, and that person was able to remove the delinquency right away, though I think it took a week or two to get reported to the credit bureaus. But the actual work to get it done probably only took me 10 minutes, and my credit score was back above 800.
posted by Caz721 at 11:07 AM on May 25, 2016

I would encourage you not to commit fraud by disputing it

It's not fraud; the burden of proof (and a light one it is, too) is on the creditor. If they can't or don't substantiate the missed payment, that's their problem. I'm not sure it's the best approach to the problem here, but it's not fraud.
posted by praemunire at 11:10 AM on May 25, 2016 [2 favorites]

Best answer: I'd like to lend another voice in support of the "at least call and try to get it removed" idea. I've spent years studiously paying down debt, getting to 0 balance, and then paying off religiously month to month by having my bank auto-pay any amount under a certain limit. About a year ago, I got an email that my auto-pay signup had been canceled for some minor reason I can't remember. I made a mental note to go back and reactivate it, but never did.

Fast forward a month to when I'm looking at some finances and I realize I missed a payment and I'm now 30 days over due. I paid the full balance then, as soon as the payment cleared, I took action. Expecting to get zero sympathy, I called the bank (BOA, in this case), explaining the situation and taking full responsibility for it. Then I pointed to my previous payment history and asked if, pretty please, they could understand and make it go away just this once.

I got kicked up to an account manager whom I repeated the same sob story to. She took one look at my history and said, "Sure, I can clear this one up. Just be on time next time." It took a couple months, but it dropped off my credit report eventually. I was actually surprised by the whole thing and how non-consumer-hostile it was. It probably depends very much on how good or bad a day the person you speak to is having, and how pathetic and self-effacing you manage to sound, but it's worth a shot.
posted by jammer at 11:20 AM on May 25, 2016

It's not fraud

How about disputing it, I have only heard folks having good luck with that on a legitimate delinquency when a debt is quite old and the records are perhaps not readily accessible to the card company. I definitely was late by 60 days in that payment just last summer.

Disputing something you know to be true is fraud.
posted by Candleman at 11:29 AM on May 25, 2016 [1 favorite]

Response by poster: Thank you all for the helpful suggestions. I will call the card company and ask if they can drop it from my record. I had assumed they would never do that but it seems some of you have had success.

As to some of the other suggestions, I pay all of my balances off monthly and the only debt I carry is a mortgage and a small subsidized student loan. I have a good amount of savings. I will definitely be able to refinance, the question is getting the top rate and not having a mistake made in a baby exhaustion fog cost me for 30 years.

Candleman, the curve in that VantageScore explanantion is the opposite of what my score has done (see the link in my question). Mine rose sharply at first and then leveled off (and then actually lost some ground possibly because I had higher balances at the reporting time, again, I pay them off every month.)
posted by no1hatchling at 11:47 AM on May 25, 2016

Candleman, the curve in that VantageScore explanantion is the opposite of what my score has done (see the link in my question)

Yours has followed the general expected curve. You've had a small dip of around 20 points, which can be completely unrelated to the late payment. For example, even if you pay your credit card balance in full each month, depending on when the snapshot of your accounts is taken by the credit agency, that can still affect your DTI. I just took a look at the sample Experian credit score that Citi provides for me. Despite paying my credit cards in full each month and no other badness going on, I had a 30 point drop in January, most likely because I bought a large ticket item that did not actually come due until the February bill.

One thing that might help is ceasing using credit cards at all and using cash/debit instead. Even though your cash will be the same at the end of the day, your DTI will get better.
posted by Candleman at 4:49 PM on May 25, 2016

I fully support the advice voiced above to call the credit card company and request them (nicely) to remove the delinquency off your record. I'd explain how you have been a long time customer and how it was a one-time oversight. You'd (hopefully) be pleasantly surprised by the kind of things credit card companies are willing to do to keep customers. If you get someone who is unwilling to help, I recommend thanking them and then HUACA (hang up and call again).
(If the above fails, a negotiating strategy could be to offer that you would move this card to the top of your wallet for your major purchases and/or that you are willing to sign up for automatic payments so that a missed payment can never happen again. And maybe ask to speak to a Credit Analyst if the normal CSR is not able to help you.).

Another thing you can do to improve the score further -- for the next months before you apply for the refinance if you start paying off all (except one) of your credit card balances before the statement closes, it can definitely make a difference. The balances on monthly statements are reported to credit agencies, so if you can make that 0, that would make a big difference in your balance-to-credit line ratio. I said "except one" because you don't want Zero balance reported on ALL credit cards (as that looks like you don't use the credit card at all, which apparently affects the score negatively), in fact it is better to have one card reported at ~10% ratio. I saw the effect of this personally in my score rising above 800 in the months leading up to getting my mortgage.

This blog post has some clear advice that I'd recommend, including not closing any credit card accounts in the time leading up to your refinance/mortgage. Good luck with your refinance.
posted by thewildgreen at 11:18 PM on May 25, 2016 [1 favorite]

Response by poster: For any future readers, I called and gave my sympathetic story and AMEX was happy to "re-age" the account (i.e. remove the late payment reports). In my favor, I called a full year after the issue and had remained current for the intervening time. Also I was a longtime customer who was always current before the incident in question as well, even though I had not used the card much in recent years.
posted by no1hatchling at 11:53 AM on September 14, 2016