Missed mortgage payments and its impact on credit score

If you think that maintaining a good credit score is an essential part of your life, it is advisable not to miss any mortgage payments. Timely mortgage payments every month help you to improve your credit score. It is always recommended to make mortgage payment your first priority among the bills you pay every month since it not only protects your house from foreclosure, but also help you to maintain a good credit score. This is because of the fact that if you have a missed mortgage payment, it technically implies that you are in breach of your agreement with the creditor. Even if your creditor does not initiate foreclosure, late charges and other fees will add to your expense if you miss one payment and will make it even more difficult for you to make up the missed payment at a later date.

A missed mortgage payment no doubt gives a negative impact on your credit report and lowers your credit score. So a missed payment can be very costly. A missed mortgage payment for more than 30 days can even lower your credit score to about 100 points or even more and this decrease in credit score will remain for as around 12 months from the date the account becomes current. Thus in order to keep up your financial health, make sure that you make the payment on time each month.

Ways to ensure that your mortgage payment is made on time.

• If you ever miss your mortgage payment, notify your lender of your financial position immediately, since it may prevent your home from becoming foreclosed. Since foreclosure is costly for both parties, the lenders mostly agree to help the borrowers to keep their houses. But this is the case only when you are one or a couple of payments behind. They can plan you a repayment plan for the missed mortgage payment which you can pay slowly with your current payments.

• Try and cut unnecessary expenditures. Although it is very difficult to cut down expenses, yet it is necessary to do so to make timely mortgage payments. Keep the money you save in a different account and use it to pay your mortgage bills.

• If you are hesitant to talk to your creditor for some reason or the other, call a counselor who is approved by the US Department of Housing and Urban Development, who can assess your financial situation and help you negotiate with your lender.

• Finally always ensure that you reply to the letters send by your lender if you miss a mortgage payment. Else, the lender may take legal action against you which may result in foreclosure.