Tom’s Story – Part 2
The $10 Mistake That Cost $15,000
Welcome back to Month 2 of your credit journey. Last month, we introduced Tom, a client who worked hard to live within his means and had built an excellent credit score. But today, we’re digging into what happened next. Because as careful as Tom was, a single $10 oversight changed everything.
Tom’s $10 Mistake
As we shared, Tom had one credit card with a $500 limit. He didn’t like debt and used it carefully. In fact, Tom had built his credit score up to an impressive 800.
One month, his credit card bill arrived; it was only $10. Tom was busy, working long hours, juggling family and life. He glanced at the bill and said, “I’ll get to that.” It was $10. Not a big deal.
But he didn’t pay it.
The next month? The same $10 showed up. Still busy, Tom shrugged it off again. He’d get around to it.
By the third month, Tom realized he’d forgotten the payment and finally took care of it.
What Tom Didn’t Realize
That missed $10 payment triggered a 90-day late payment on his credit report.
Then came the big news; Tom and his partner had an accepted offer on a home. He was pre-approved, the rate was excellent, everything was lining up perfectly.
Until I ran his updated credit report.
His score had dropped from 800 to below 600.
What happened?
That single $10 bill, left unpaid for two months, had dragged his score down by over 200 points. And because of that, Tom no longer qualified for standard lending. We had to move to an alternative lender.
Thankfully, Tom had the funds to put 20% down. But the cost of that $10 delay?
About $15,000 in extra fees:
- 1% lender fee
- Broker fee
- Extra appraisal fee
- Higher legal fees
Why This Matters to You
If you’ve taken nothing else from Tom’s story, remember this:
Pay your minimum payments on time, every time.
Whether it’s $10 or $1,000, every payment matters.
What gets reported to the credit bureau?
- Credit cards
- Lines of credit
- Car loans
- Student loans
- Some mortgages
- Payday loans (in some cases)
- Any application for credit
Missing a payment, even a small one, can derail years of hard work. Lenders don’t differentiate between a forgotten $10 bill and a missed $1,000 one. A late is a late.
Your Action Step This Month
Set up automatic minimum payments on all credit accounts. Even if you plan to pay in full later, this will protect your score from late payments due to busy schedules or simple forgetfulness.
To-Do List – September
- Set up autopay for minimums on all credit cards and lines of credit
- Review your credit report for any missed or late payments
- Make a list of all accounts that report to credit (even if they have a zero balance)
- If you’ve ever used payday loans, check if they’re reporting on your file
Start where Tom started—with awareness.
To-Do List: July
- Write down every credit card you currently have and its limit
- Check your balance and usage from the last few months
- If you’re always using more than 50% of your limit, try to spend less, increase the limit, or pay it down before the statement date
- If you only have one credit card, try applying for another credit card
You’re off to a strong start.
