ARE LATE PAYMENTS OF CHARGE CARDS TREATED AS SEVERELY

[Anonymous]

In scoring as minimum payments on revolvers. I am trying to get a handle on my credit and my only couple of 30 days late were on payments of 30k on my Amex play. Is it completely crazy to think that should not be treated as harshly as being late on a a min payment on a revolver- which I have not been.

[Anonymous]

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@Anonymous wrote:
In scoring as minimum payments on revolvers. I am trying to get a handle on my credit and my only couple of 30 days late were on payments of 30k on my Amex play. Is it completely crazy to think that should not be treated as harshly as being late on a a min payment on a revolver- which I have not been.

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It's hard for me to think that there's a difference in a 30 day late in regards to the type of account, limit on the card, minimum vs. over the minimum payment. I believe a 30 day late is a 30 day late no matter what.

[RonM21]

I don't think there is a difference.

[Anonymous]

While I agree they aren't treated any differently, to me being late on $30k sounds far, far worse than being late on a much smaller payment.  I would be glad it isn't treated worse!

[RobertEG]

I remember a discussion by Fair Isaac in a webinar several years back that their analysis shows that consumers are much more likely to become delinquent on charge card debt than on their mortgage or auto loans.  That logic is easy to accept.

It would not then be illogical in a risk of delinquency analysis to give different risk prediction values to credit card payments than to mortgage/auto installment payments.

Whether or not Fair Isaac actually does so in their analysis is unknown to me, but I would not dismiss the possibility.

[Anonymous]

I wrote about this in another active thread.  I feel it would be much better if the severity of a late payment was somehow factored into FICO scoring.  By severity I mean percentage of the payment missed.  If the full payment is missed, it should negatively impact at 100%.  If someone can come up with $500 of a $1000 mortgage payment, they are at least showing a 50% ability and effort to pay so IMO they should be impacted less than the guy that completely doesn't pay.  This would also help protect against honest mistakes such as shorting a payment by accident (which I've done).  A guy pays $998 of his $1000 payment by accident and shorts it 2 bucks.  Those 2 bucks shouldn't IMO carry the same weight as missing the full $1000 payment which is currently the case with FICO scoring as "a late is a late is a late" regardless of amount.

[Anonymous]

I am confused by the person who thinks being a few days late on a 30k payment is worse than a $50 payment. The few payments I was slightly late on were massive and paid in full as they were on a charge card. I feel like it's not fair to weight these as heavily as a minimum payment on a revolver.

[Anonymous]

I've always been under the impression that a late is a late, regardless of dollar value.  It could be a few dollars or a few thousand dollars and I believe it impacts the score the same.

As I argued above, I too believe that dollar value SHOULD be taken into consideration, as someone that misses a $1500 mortgage payment is in my opinion raising a greater red flag than someone that misses a $25 credit card payment.  I get it that the actual offense is equal; both people missed a payment but if I was a lender I would be far more worried about the person that missed $1500 than $25 - to me that would indicate greater risk and should be reflected in scoring as such.  Just my opinion, of course.

[iv]

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@Anonymous wrote:
I am confused by the person who thinks being a few days late on a 30k payment is worse than a $50 payment. The few payments I was slightly late on were massive and paid in full as they were on a charge card. I feel like it's not fair to weight these as heavily as a minimum payment on a revolver.

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Wait, what?

You're saying that you think being 30+ days late (that's not "a few days") on 30k payments should be treated ...less harshly... than being 30+ days late on a $50 payment?

That... really doesn't make much sense.

As others have mentioned, currently a 30-day late is a 30-day late, regardless of the type of account or amount (except for mortgage lates when applying for another mortgage, anyway).

And if models were changed to distinguish between lates by types or amounts, it's much more likely that lates for larger amounts and/or on "due-immediately" tradelines would count more heavily, not less.

[Anonymous]

Yeah, I think the larger the payment missed the harsher the penalty should be... not the other way around. 

If someone is failing to pay a $2000 mortgage payment verses a $25 minimum CC payment, the mortgage lender misses out considerably more so if anything that should impact the borrower in terms of negative FICO scoring more than the $25.  I understand the "a late is a late" argument and am fully aware that this is the case with FICO scoring, but it doesn't really paint an accurate picture of the "risk" factor of the individual that missed the payment.

The guy that missed the $2000 payment almost by definition has displayed greater risk than the guy that missed $25.  Drastically different quantifyable amounts, zero quantifyable difference in FICO score impact.