After extensive reading on credit modeling, and feedback I have received from numerous other contacts, here is my approximation of the effect of late payments on credit scores. Take them or leave them, but they are based on extensive data, and exemplify the light hit of 30-day lates, and the hell-hole of 90+-day lates.
30-day late payments:
Around a 15-20 pt or more sure hit when they first occur, dropping to around a 10-15 pt. hit after one year of aging, then to around 5-9 pts after two years of aging, dropping to only a 1-5 pts hit after thee years. They fade relatively fast in the schema of the scoring algorithms, for they are not yet “dirty” file indicators.
60-day late payments:
Around 35-40 pts immediate hit, dropping to 20-25 after one year, around 15-20 after two years, but only decreasing to around 18 after three years. They fade slow, but linger on. Outside of the generic FICO scoring model, 60+ lates also drive most consumers into a new scoring category by most lendors using their own models into a “dirty” credit history bin-bucket.
90+-day late payments: the red flag of the credit industry
High initial hit, compounded upon the prior 60-day late, for a total hit of 50+++ points. Serious hits. Warning signs blare in the scoring algorithms. This only drops by around five points after one year, to around 40-50. Two years out, the hit is still around 38 points. After four years, still lingering around a 30 point hit. A 90-day late lingers strongly, and fades at the same rate as the melting of the polar ice caps. After 6 years, it appears to only recede to around 20, at which point it dissolves and goes away at 7 years. Few can wait 7 years to recover those points.
In comparison, a drop in % revolving credit utilization from 50% to 10% will achieve about a 50-60 point FICO increase. However, one 90-day late wipes all that out, based on the weighting. Pay on time, pay on time, pay on time!!!
Regardless of the accuracy of my point projections, the bottom line is obvious.
As usual I enjoyed reading your post! I will, however, have to disagree with some of your assumptions. A lot will depend on which bucket one was in prior to the new derog being reported. A single 30 day late can lower one's score by more than 100 points but it is true that this late's negative affect fades rather quickly.
Now with a 60 day late it's different. A bigger drop in scores and big negative affect for a full two years.
A 90 date late is a serious derogatory on a credit report and has the same negative affect on scores as a CO, collection, or any public record. If it's less than two years old, it will have a major negative affect on scores. By six years it's just nothing more than a zit on your CRs, once it's removed you might see a small improvement in scores if any.