One of the most frequent error codes for credit scores is “time since delinquency is too recent or unknown.” Since 35% of credit scoring formulas depends on your payment history, late payments can be a big blow to good credit. The impact is greater the more recent your delinquency.
|“Time Since Delinquency is Too Recent or Unknown”||Credit Score Risk Factor Codes|
Delinquencies can have a disastrous effect on your credit scores. You get some of your points back when you regain current status, but those missed payments will haunt you for seven years until they drop off your credit history.
If you missed payments five or six years ago, they will have a somewhat muted effect. However, a delinquency just six months ago will have a devastating impact on your ability to obtain credit.
Consider this example. Missing a payment is similar to getting a black eye. Everyone that looks at you for the next couple of weeks knows you got hit. Those that see you in the first day can clearly tell you got rocked. As the injury fades, fewer people tend to notice it outright. Eventually it clears up completely.
Credit blemishes work much the same way. No one wants to extend you credit while you are delinquent. Once you bring your accounts current, it may still take some time before a lender is willing to take a chance on you. Even if you are approved for credit, the terms will not be very good initially.
How Can I Fix It?
There are some steps that you can take to reverse or reduce the damage caused by late payments. Your options depend on the nature of the delinquency and your financial resources.
First, if your delinquency is the result of a one time missed payment, you should contact the lender directly to request forgiveness. Most major creditors will reverse the late fee and continue to report the account current without any negative credit repercussions if you have been a good customer. Many credit card companies provide this courtesy once each year. If your lender refuses to forgive the late payment, then understand that versions of credit scores that rely on the newer FICO 08 scoring metrics do not penalize a single missed payment as much as earlier versions did.
Second, delinquencies will continue to haunt you in a major way if you cannot keep your accounts current. Once you have restored accounts to current status, make the necessary changes to keep them current. Ways that you can prevent future delinquencies include utilizing online bill pay services at your bank or credit union, using a bill payment calendar and paying off balances in full to avoid future bills.
If you have a history of delinquencies, then your best bet is likely to wait it out. Just like with an injury, you need to let the swelling in your credit report go down. As long as you maintain some accounts in current standing, they will start to outweigh the older negative credit history that still shows up.
You may not necessarily want to wait a couple of years before applying for your next credit account. However, simply applying for credit can further reduce your scores, so it is best to wait until you are confident that you will qualify.
A cooling off period can allow your credit rating to stabilize and begin to recover. As a delinquency gets older, it has a lesser negative impact on your credit scores. As long as you have other accounts in positive status, your scores will get better with time. If you have no positive accounts, then you may need to take a different approach.
There are methods for gaining new credit when you have damaged credit. However, you will likely need to wait at least several months following a delinquency before applying for new credit.
The time since delinquency is too recent or unknown is credit bureau risk score reason 13. It is NextGen score code K0. For more information on credit scoring, see the complete list of credit score factors.
Long is a graduate of the University of North Carolina at Chapel Hill with a B.A. in Industrial Relations. He subsequently received his Certificate in Nonprofit Management from Duke University. His Certificate in Financial Planning was issued by Florida State University.
Long has achieved the Accredited Credit Counselor and Accredited Financial Counselor certifications through the Association for Financial Counseling, Planning and Education. Long originally achieved the Certified Credit Counselor designation through the National Institute for Financial Education.
In addition to years of nonprofit leadership, Long has been an innovator in the field of volunteer tax return preparation programs. He assists volunteer associations and nonprofit organizations who seek to integrate credit counseling and asset-building programs with free personal income tax preparation. His approach to using free credit reports as both an incentive and a screening tool for placement into asset-building programs has been shared with members of the National Community Tax Coalition, the EITC-Carolinas Initiative of MDC, Inc. and nonprofit groups across the Carolinas.
Long assists members of our armed forces in the Carolinas, Iowa, Rhode Island, Georgia and Germany with financial readiness. Please support our Soldiers, Marines, Airmen and Sailors!
"The democracy will cease to exist when you take away from those who are willing to work and give to those who would not."