A recent Cotality report shed light on alarming data around mortgage delinquency rates. While rates declined in the past three years, that trend began reversing course in mid-2024. Cotality found that half the states experienced this uptick, but it was much more pronounced in places such as Florida, South Carolina, and Georgia, which have “faced considerable natural disasters, contributing to higher insurance costs.”
Of course, mortgage delinquencies can have serious consequences, including the most obvious one, foreclosure. But many homeowners also don’t realize just how damaging a single delinquency can be to their credit score—and how long it can follow them.
Leslie H. Tayne, finance and debt expert and founder of Tayne Law Group, says that missing mortgage payments has a more severe impact on credit scores than missing a credit card payment, as mortgage payments are considered priority debt.
“Missing payments signals a significant financial strain for the homeowner, as it’s uncommon for homeowners to miss mortgage payments because the risk is much higher than, say, a credit card,” Tayne says.
What happens to your credit score after a mortgage delinquency
First, understand that mortgage delinquency typically occurs when you are at least 30 days overdue on making at least one mortgage payment—and once you’re delinquent, your credit score will snowball rather quickly from there.
Shashank Shekhar, founder and CEO of InstaMortgage, says that a credit score typically drops within a month of a missed payment being reported, with 30-day delinquencies alone causing an average drop of about 50 points.
“The impact intensifies with longer periods of delinquency—60-day and 90-day delinquencies can substantially further the decline, although each additional missed payment has a diminishing effect compared to the initial one,” he adds.
Tayne further notes that if a payment is late or missed beyond a 30-day window, a consumer’s credit score can tank between 50 and 100 points. In addition, when the consumer’s delinquency surpasses the 60-day mark, their credit score can tank further. Still, after 120 days or more of defaulting on payments, a consumer’s credit score will incur long-term damage that might take years to recover from, she adds.
The extent of the damage depends on your starting credit score (those with higher scores often experience steeper drops), your broader credit history, and other risk factors such as existing debts.
Finally, he adds that a mortgage delinquency can remain on your credit report for up to seven years, affecting your current score and your ability to access favorable loan terms in the future.
“Even if you catch up on payments, the record of late payments lingers, so early intervention is crucial,” he says.
How to recover after a mortgage delinquency
Act fast
The first thing to know is that you should not panic, but you should act fast.
As Shekhar notes, immediate action is key if you’ve fallen behind.
First, contact your lender. Many have hardship options, such as forbearance (temporarily pausing or reducing payments), loan modification (changing terms like interest rates or extending the loan period), or repayment plans that allow you to catch up over time, he says.
“Homeowners can also seek help from HUD-approved housing counselors, who offer free guidance and can assist in navigating resources and loss mitigation programs, some of which are government-sponsored,” he adds.
Mortgage modification
Another tip for homeowners struggling to make monthly payments is to seek mortgage modification through the lender. Tayne says this option rewrites the loan terms (including the sum of monthly payments) specifically due to financial hardships.
“Mortgage modifications can also help homeowners lower their overall interest rate. At times, lenders can report the modification to credit bureaus as a settlement, which may negatively affect their credit score, so this is something to keep in mind,” she adds.
Understanding the difference between reinstating a loan and modifying one is also crucial, says Shekhar. Reinstating involves paying the overdue balance in full, whereas loan modifications and refinancing alter the loan terms.
“Reinstatement is often required to avoid foreclosure, but it isn’t always feasible, especially after delinquency,” he says.
Look into state-specific help
As Tayne notes, different states have different government programs to help residents navigate financial challenges. For example, the Homeowner Assistance Fund, which the American Rescue Plan funds, offers benefits administered at the state level that can help with mortgage payments and paying property taxes, she says.
Work with an attorney
According to Tayne, experts like attorneys who work with debtors to resolve debt can help indebted consumers understand their rights and provide often overlooked options, such as negotiating debt sums and creating financial strategies to repay debt, leading to healthier financial habits.
“Consumer beware, though, since there can be scams out there,” she says.
What it takes to rebuild credit
Rebuilding your credit after a mortgage delinquency is a gradual process that relies on discipline and consistency.
First, Shekhar recommended bringing all your accounts up to date and keeping up with every bill moving forward—payment history is the most important factor in credit scoring.
He further notes that it’s crucial to regularly review your credit reports for errors and dispute any inaccuracies that could further affect your score.
He says to also consider building positive credit activity by using secured credit cards or becoming an authorized user on someone else’s card and maintaining low balances on any revolving credit.
“While negative marks such as late payments can remain on your credit report for up to seven years, the effect lessens over time as you demonstrate responsible use of credit—and within a year or two of sustained good habits, you should start to see notable improvement,” he adds.
