30D lates and the 2 year mark

[Revelate]

There are numerous historical threads and comments here that 30D lates do not affect one's FICO score after the 2 year mark.  Most of this probably came from the old Scorewatch product which was EQ FICO 5 at that time, a FICO 04 model explicitly, akin to TU FICO 4.

I have a 30D late from 10/2015, some reason codes (or lack thereof) from a few reports... note the FICO 8 actual reason code is cut and paste from an industry option but the understanding score for baseline FICO 8 is "bad payment history" which we can reasonably assume means the missed payment as it's the only blemish I have on that bureau:

5/2017:

TU4: 2. You have one or more accounts showing missed payments or derogatory indicators

TU 8: 1. You have one or more accounts showing missed payments or derogatory indicators

TU 9: 1. You have one or more accounts showing missed payments or derogatory indicators.

6/2017:

TU 4: 4. You recently missed a payment or had a derogatory indicator reported on your credit report.

TU 8: 1. You have one or more accounts showing missed payments or derogatory indicators

TU 9: 1. You have one or more accounts showing missed payments or derogatory indicators.

9/2017:

TU 4: nothing listed, replaced with too few or too many credit accounts at #1 (assuredly too many in my case)

TU 8: 1. You have one or more accounts showing missed payments or derogatory indicators

TU 9: 1. You have one or more accounts showing missed payments or derogatory indicators.

12/2017:

TU 4: nothing listed, replaced with too few or too many credit accounts at #1

TU 8: 1. You have one or more accounts showing missed payments or derogatory indicators

TU 9: 1. You have one or more accounts showing missed payments or derogatory indicators.

For TU FICO 4, the 2 year mark is a bit of a mixed bag, looks like there was some changes before that date and it's not listed in reason codes after that; however, I don't have a marked change in my scores though I have some high utilization of a single tradeline on the current report and that might be skewing the score though the too many credit accounts implies a scorecard shift.  Will sort that out in likely Februrary when I spend my annual 3B pull (delaying it to get some inquiries from January out of the picture on EX).

TU FICO 8 and 9 though, the conclusion is inescapable: a 2+ year old 30D absolutely factors into one's FICO score, there is no exclusion at the 2 year mark.

[Anonymous]

This has been my RECENT experience as well.  I've been apping like crazy for the last couple of years (gardening now!) and never had a denial listing my two 2014 30-days-lates as a reason until just recently upon entering the 700's...suddenly all of my denial letters list this as one of their excuses.  Now I'm planning to go into "Goodwill Letter" mode in a HUGE WAY over those two (what I had previously thought) were irrelevant derogs.

[Anonymous]

My understanding from reading on this forum regarding 30 day (and 60 day) lates isn't that they stop impacting score after 2 years, but rather that they mostly stop impacting score after 2 years.  While it's likely next to impossible to quantify that, I always was under the impression that say 75% of their negative sting went away after 2 years, but 25% or so remained.  That being said, I would expect reason codes to still point to a minor delinquency even after the 2 year mark is crossed. 

[Revelate]

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@Anonymous wrote:

My understanding from reading on this forum regarding 30 day (and 60 day) lates isn't that they stop impacting score after 2 years, but rather that they mostly stop impacting score after 2 years.  While it's likely next to impossible to quantify that, I always was under the impression that say 75% of their negative sting went away after 2 years, but 25% or so remained.  That being said, I would expect reason codes to still point to a minor delinquency even after the 2 year mark is crossed. 

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They likely would've shifted down the stack if that were the case.

I'm not entirely sure why TU 4 went a little wierd before the 2 year mark with respect to reason codes but given the late is front and center on all FICO 8 and FICO 9 classic and industry options, it's safe to say the penalty is still there.

Also I didn't see any change in score around the 2 year mark either, and given TU is 40ish points below EQ and has been since the tax lien disappeared, that suggests penalty phase.

I think this is likely another example of old data not holding up under new evidence, or to be more charitable, it is certainly no longer applicable under the newer algorithms.  I'll look at my TU 04 a little more closely for correlation when I pull again in the new year.

[Anonymous]

I've now seen at least a dozen folks 3Bs go up anywhere from 20-30 points when a single older 30D was goodwilled (on my insistence).  So my "late pays versus FICO" graph was modified to reflect a 25 point loss after 4ish years because it's consistently held up.

The 2 year to 4 year point is where I am missing strong correlating data, though.  I have a few (3? 4?) folks who had some lates removed in that age that saw changes but their profiles were too complicated to nail down what affected what so I just extrapolated.

I feel confident that a 30D late will affect score negatively right up until it drops off, but it's an insignificant penalty in the grand scheme of things (maybe 5% of total points possible).

[Anonymous]

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@Revelate wrote:

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They likely would've shifted down the stack if that were the case.

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I'm not sure what you mean by the above?

I also wouldn't expect a 30 day late to necessarily have a breakpoint at the 2 year mark.  I would think one's score would slowly come back over those 2 years.  Using my 75% and 25% numbers for the sake of discussion, it would mean 75% of the points lost would come back over the course of the 2 years, not all at the 2 year mark.  I'm sure there are data points out there where someone lost a bunch of points initially with the reporting of a 30 day late, say 60, but when it was removed a year or two later maybe they saw an increase of 25-35, meaning that 25-35 had already been restored due to the delinquency aging.

[Thomas_Thumb]

FWIW - I took downstack to mean being moved further down on the reason statement list. For example the reason dropping from top billing to being listed 3rd.

[Revelate]

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@Anonymous wrote:

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@Revelate wrote:

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They likely would've shifted down the stack if that were the case.

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I'm not sure what you mean by the above?

I also wouldn't expect a 30 day late to necessarily have a breakpoint at the 2 year mark.  I would think one's score would slowly come back over those 2 years.  Using my 75% and 25% numbers for the sake of discussion, it would mean 75% of the points lost would come back over the course of the 2 years, not all at the 2 year mark.  I'm sure there are data points out there where someone lost a bunch of points initially with the reporting of a 30 day late, say 60, but when it was removed a year or two later maybe they saw an increase of 25-35, meaning that 25-35 had already been restored due to the delinquency aging.

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TT got it right in terms of what I was suggesting: moving down the reason code list, as the order is relevant especially when we're talking impact of #1 vs #3 or #4.

Nothing in the algorithm ages like that, so I really doubt lates do either.  The scorecards of course have some comparison within them, but if you took two absolutely identical files with the exception of a one month difference in their 30D late they'd almost assuredly (99.9%) score the same the majority of the time.

Won't ever happen of course in real life, but nothing ages on a linear progression to my knowledge, it's always a step function with FICO.

[Anonymous]

With a 750 score I always felt the reason codes  were not  that meaningful.   It appears you are in a clean bucket but have a two year old ding. In the clean bucket anything "bad" can hurt.  

[Anonymous]

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@Revelate wrote:

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Nothing in the algorithm ages like that, so I really doubt lates do either.  The scorecards of course have some comparison within them, but if you took two absolutely identical files with the exception of a one month difference in their 30D late they'd almost assuredly (99.9%) score the same the majority of the time.

Won't ever happen of course in real life, but nothing ages on a linear progression to my knowledge, it's always a step function with FICO.

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I'm not suggesting that it's not a step function, just that the first break point IMO isn't 2 years.  I actually don't think it's out of the question that the first break point is extremely early on, even 1-2 months.  There are people that report a big 70 point drop from a late payment, but state that after 2 months for example that their score has increased 20-25 points.  Could the 20-25 points be from something else?  Possibly, but I think there's enough data out there that shows that the initial hit of a late payment is more impactful than the same late payment a few months down the line.