How fast does your credit score recover from your goofs?

Experts say you can expect a late payment to hurt your credit score for seven years, with your score gradually recovering over that time frame as you make smart borrowing decisions -- though exactly how much and how fast your score recovers isn't entirely clear.

The federal Fair Credit Reporting Act says that negative items can only appear on your credit report for seven years, but it doesn't say how the credit industry should treat the impact of those items after they happen. That vagueness, combined with the secrecy and complexity involved in credit scoring, mean that it's tough to say exactly how a borrower's credit score will recover from a late payment. Still, provided the borrower makes smart decisions following a slip-up, time will heal those credit wounds.

"Every consumer's situation is different, but generally speaking, the impact from a negative item, such as a late payment, will lessen as that item ages" says Steve Katz, spokesman for credit bureau TransUnion.

While FICO, creator of the most-widely used scoring model, largely keeps the details of its scoring model a secret, we do know the approximate damage a late payment will cause. FICO pulled the curtain back a bit on its scoring model recently when it acknowledged just how much certain credit mistakes can hurt a borrower's credit score. For example, in the case of two hypothetical consumers, FICO said that a 30-day late payment would reduce a FICO score of 680 by 60 to 80 points, while an identical late payment would reduce a FICO score of 780 by 90 to 110 points. (For more on this topic, see our story on FICO's damage points.) You can run FICO's credit score simulator to get an idea of how much damage various mistakes, including a late payment, may cause to your own credit score.

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