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Does paying your mortgage on the 15th hurt your credit?


Many homeowners have mortgages that are due on the 1st of the month. However, some mortgages actually have a mid-month due date, such as the 15th. This leads to the question – does paying your mortgage mid-month hurt your credit compared to paying on the 1st?

The short answer is no, paying your mortgage mid-month does not directly hurt your credit. As long as you make your monthly mortgage payments on time, whether on the 1st or 15th, it will have the same positive impact on your credit. However, there are some indirect factors related to mid-month payments that can potentially impact your credit.

How mortgage payments affect credit

First, it’s important to understand how mortgage payments impact your credit in general. Your payment history makes up a significant portion of your credit score – around 35%. This includes all types of accounts – credit cards, auto loans, student loans, and mortgages.

When you make a mortgage payment on time each month, it is reported to the credit bureaus. This establishes a positive track record and helps improve your credit. If you miss payments or pay late, this can damage your credit.

The actual date you pay within the month does not matter for credit scoring purposes. Whether you pay on the 1st or 15th, as long as you pay before the due date, it is considered on-time.

Grace periods

Most mortgage lenders have a grace period of 15 days. This means if your mortgage is due on the 1st, you typically have until the 15th to pay before it is considered late.

If your due date is the 15th, your grace period would extend to the end of the month. As long as you pay within the grace period, it is on time. However, the longer you wait to pay, the higher risk of forgetting and paying late.

Indirect factors of mid-month payments

While the actual date doesn’t directly affect your credit, there are some potential indirect impacts of having a mid-month due date:

Increased late payment risk

As mentioned above, having a shorter grace period increases the chance of paying late if you forget or have cash flow issues. Many people get paid at the end of the month. If your mortgage is due on the 15th but you don’t get paid until the 31st, it leaves little room for error.

Even being a few days late can hurt your credit score. According to FICO, paying 30 days late could drop your credit score by 60-110 points. Being 90 days late can drop it by 150-220 points.

If you sometimes cut it close with the 1st of the month due date, a mid-month due date leaves less leeway. Being late would damage your credit.

May affect credit utilization

Your credit utilization ratio is the percentage of your total available credit that you are using. This factor also makes up a significant portion of your credit score.

Ideally you want to keep your utilization below 30%. Paying a mortgage mid-month changes when that balance gets reported to the credit bureaus.

For example, let’s say your mortgage is $2,000 and it’s due on the 15th. If your credit card statement also closes on the 15th, that $2,000 balance would not get reported since you haven’t paid it yet. This may result in lower reported utilization than if it gets paid before statement closing.

However, the impact depends on your overall spending and credit limit as well. Using more or less of your credit each month can outweigh any timing impacts.

Need to budget differently

Making a large mortgage payment mid-month requires budgeting your paychecks and other cash flows differently. Some homeowners find it more challenging than having it aligned with pay dates and other expenses at month end.

When first transitioning to a mid-month due date, it can be easy to forget if you’re used to paying on the 1st. This could result in missed or late payments until you adjust.

Tips for managing mid-month mortgage payments

If you have a mortgage with a mid-month due date, here are some tips to help avoid negative credit impacts:

Consider paying right after you get paid

Instead of waiting until mid-month, pay your mortgage right after your first paycheck to ensure it’s paid on time. This takes the pressure off trying to remember later in the month.

Set up automatic payments

Having your mortgage payment automatically withdrawn around the same time each month is another easy way to ensure reliable on-time payments. Just be sure the date coincides with your payroll schedule.

Set reminders

Use calendar reminders, mobile alerts or other tools to prompt you to make your mortgage payment during the month. Build the habit of paying mid-month without having to think about it.

Watch your utilization

Keep an eye on your credit card balances and overall utilization around the time your mortgage payment gets reported. If needed, make an extra payment before your statement date.

Build an emergency fund

Having cash reserves gives you more cushion in case you ever run short on funds right before your mortgage due date. This helps avoid the need to pay late if money gets tight.

The bottom line

While a mid-month due date does not directly harm your credit, it introduces some additional factors to be aware of. With proactive planning, budgeting, and reminders, you can ensure your mortgage gets paid on time every month – regardless of the due date. Maintaining positive payment history will benefit your credit score in the long run.

Payment Dates Potential Impact on Credit
Paying on the 1st vs. 15th No direct impact as long as paid by grace period
Paying late Major damage to credit score
Mid-month balance reporting May affect credit utilization

Key Takeaways

  • Paying your mortgage mid-month does not directly hurt your credit – the due date itself has no impact.
  • However, indirect factors like increased late payment risk, credit utilization timing, and budgeting challenges may have an effect.
  • With proper planning and diligence, you can avoid any potential credit damages from a mid-month mortgage due date.