[Perfectmax]

I am very concerned because I am looking to refinance my house very soon and I just got a 1 x 30 day late on my Bank Of America Credit Card. I called them and try to dispute it but they stated that it would be against the law for them to do so. The reason that I have a late payment is because I use this ccard for my work expenses and my company took forever to cut me a check. (still my fault, i guess, and I feel very stupid!).

My credit has always been 740+ and now it dropped to 650 overnight! I went ahead and paid the small balance on the card and closed the account.

My question: How screwed am I? What do I need to do to get my credit back up to 740+ and most importantly, how long with that take???

Thank you for your advice / input!!

[hannah]

It could very well be that closing the account is what caused the drop.

[stargazer0725]

I hate to tell you Perfectmax, but closing the account was probably NOT the way to go.

FICO is based partially on how long your credit history is, as well as your debt/available credit ratio (among other things). So closing accounts hurts 2 ways: It shortens the length of your credit history, and 2) It takes away from your available credit balance, thereby making your overall debt/credit ratio much higher.

FICO is fickle and varies per individual, but I'd probably look for another dip in the score once the closed account notation hits before it gets better over the next six months/year of on-time payments.

(Hey, Hannah, looks like you posted while I was composing!)

[jlynn]

How long since you closed it? You might try calling them back and kindly explaining you have buyer's remorse and can you reinstate the card - same number, same everything. Maybe somebody here knows of a good person to talk to at B of A.

As far as the refinance goes - Alot of times with something like this, you can write an Oops I'm bad letter to the underwriter, explaining exactly what happened. Believe it or not they (at least used to) understand that sometimes things happen. As long as that is your only recent late, you will probably have good luck with that, especially since the card is now paid off.

I do agree with Hannah and SG, closing the card is probably what put your score into freefall.

[Hedwig]

I also agree. I had a 30-day late and it only dropped my score about 5 points.

How long it has an effect depends on a lot of things as well--how old the account is, what your overall history length is, what your ratios are, and probably what color your shoes are.

[Perfectmax]

Here is the problem: When you get a late payment the account transfers into the deliquency section of your credit report, which can never be reversed. If you keep that account open and have a balance, it will hold more weight (negatively effecting your score).

[Hedwig]

That's not necessarily true. It's a negative whether it's open or not.

The open account helps history as well as ratios. The late payment is still a late payment.

[jlynn]

Originally Posted by Perfectmax

Here is the problem: When you get a late payment the account transfers into the deliquency section of your credit report, which can never be reversed. If you keep that account open and have a balance, it will hold more weight (negatively effecting your score).

Hedwig's good point aside, your theory is flawed. If you leave the account open, in 7 years the late will disappear, but the account will remain. If you close the account, it will either be deleted or moved to the positive accounts section - dependent upon the mood of the CRA's on the day the late expires.

Further, if an account is open, active, and doesn't become late again, you can *sometimes* at a later point, get a good will adjustment, in that the creditor might remove the late since you are a good customer. They aren't going to do jack for you once the account is closed.