My Credit Score Plummeted After a Mortgage Payment Mix-Up – What Can I Do?

A Reddit user made a mistake with his mortgage payments, and it is having serious long-term consequences. The poster, who had been hoping to move soon, has indicated that his credit score has been badly damaged as a result of his error, and he isn’t sure where to go from here.

Here’s what happened, along with some tips on how the Reddit user can fix the situation. 

What mortgage mistake did the Reddit user make?

According to the Redditor, his problems started when he removed Private Mortgage Insurance (PMI) from his mortgage. PMI is required when you make a small down payment, but once you have a certain level of equity in your home, you can typically have it removed. The poster hit that point, took PMI off his loan, and asked the bank to remove it from escrow. 

Since the Redditor thought this money was going to come off his payment, he tried to pay just the principal and interest because he assumed he would no longer owe the full amount. However, because the payment was below the amount of the balance due, the system rejected the payment, and the poster ended up paying nothing at all for that month. 

When the bank called him, he learned he was behind on his loan, so he gave the bank his account number and asked them to bring the account to current. The money came out of his own, and he received a confirmation, but the payment ended up being reversed, and the money got put back into his account. This happened several more times, despite receiving payment confirmations. The Redditor did not know anything was wrong because he wasn’t opening the letters from his bank and mortgage statements, so he thought all was well.

Although he finally discovered the issue and went to the bank to resolve it in person, he ended up with a record of eight late mortgage payments on his credit report. He previously had a 790 credit scor,e but since he had so many “late” mortgage payments, his credit score ended up going all the way down to 660.

He’s not sure what to do, or if the situation can be fixed, which is a problem as he was hoping to move and get a new home loan soon. 

How can the Redditor fix the situation?

Unfortunately, the poster’s options may be limited here.

Several other Redditors who commented on the thread suggested that he write a “goodwill,” letter and ask the loan provider if they might be willing to remove the record of the late payments. Creditors sometimes do this if you are generally a good customer who just happened to make a mistake, like forgetting to pay a credit card bill one month. 

Since the poster had so many late payments, though, and since the situation went on for so long, his mortgage company may not be willing to work with him on removal of all eight late payments — especially since he really objectively probably hasn’t been that great of a customer in their eyes due to missing so many payments.

He could try to explain the situation to the lender, including providing evidence of his payment confirmations, and this may make them more willing to work with him — especially since he has corrected the issue now. However, there is absolutely no guarantee the lender will want to help him out.

While he theoretically could try disputing the late payments and showing the record of payment confirmations as evidence, as another poster suggested, this is also not likely to be successful because the lender can show the payments were not actually made — and accurate information is not removed in credit report disputes.

Ultimately, the only real option the Redditor has now is to wait and make sure not to miss any more payments, and, eventually, his credit will increase over time. This is likely to happen much more slowly than he would prefer. As several posters commented, he should strongly consider paying more careful attention to his finances to avoid situations like this in the future.

He may also want to make sure he has a great credit card that he can charge purchases on regularly and pay off on time to boost his score further. By continuing to use credit responsibly, eventually the record of the late payments won’t be so importan,t and his score should come back up over time.

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