Sometimes paying your bill the wrong way — or in this case, trusting that an ex-spouse will get it right — can torpedo a good credit score, as one reader found out. Here’s her story:
I have been divorced for 6 years, and my ex-husband kept the house that we lived in. He has made all house payments on time in the last 6 years. When he got down to a small amount being owed ($188) on the small loan of our 80/20 split mortgage, he sent in a check for the final amount — Not knowing there was a rule of making a final payment with a cashier’s check in lieu of a personal check. The mortgage company eventually returned the check and advised him of the same, however by then the mortgage payment was late. This resulted in them reporting this on both of our credit [reports], dropping [my score] 150 points . The error has since been resolved and the total loan amount is paid in full, however they are refusing to remove this from my credit report. I understand the whole “my name is on the loan” reasoning, and I don’t disagree with it, however this was an honest error on an otherwise spotless credit history on my part . . . . I have disputed it with the credit agencies, disputed it in writing with the mortgage company, but am looking for any advice to repair my credit score that has dropped from 780s to 600s?????
The drop in her score, from the “excellent” range to “poor/fair” territory, as a result of just one late bill, illustrates the impact that a single misstep can have on an excellent score. The good news here is that if she has other credit accounts, she won’t have trouble adding positive information to her credit reports, and those will help dilute the impact of the negative mark. So will time. The further this recedes into the past, the less impact it will have. (Our reader can and should check her scores regularly to track her progress. Credit.com offers two credit scores every 30 days for free.) Her best bet at this point is to pay bills on time and to make sure her balances aren’t higher than 20% to 25% of her credit limits.