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Credit Payment History: How it Affects Your Credit Score

This is Part 6 of a series on how to improve your credit score from good to excellent. This doesn’t happen overnight, so you have to be a little patient. But with some persistence and attention to details, you’ll get there.

First, let’s review the five factors, along with their respective weights, that contribute to your FICO score:

  • Payment History (35 percent)
  • Amount owed, which is the amount of credit you’ve used (30 percent)
  • Length of credit history (15 percent)
  • Types of credit used (10 percent)
  • New credit (10 percent)

In Part 5, we talked about the length of credit history and how the FICO score looks at that factor. In an earlier article, we looked at payment history, but not at a deep level. So that’s the target right now.

When it comes to credit scores, there’s always more to it than you think. And the more details you know, the more likely you are to use that knowledge to your advantage. And since payment history is 35 percent of your FICO score, it’s worth taking a long look.

What’s Part of Your Payment History?

When it comes to payment history, the first thing that pops into your head is probably your credit card bill. And maybe your mortgage. But there’s more to think about than that. Here are some of the account types that are considered in this category:

So what happens if you miss a payment? It’s not all gloom and doom because you can come back from it in time as long as you don’t miss any more payments. But to minimize the damage, pay your bill as soon as you realize it’s late. The FICO score algorithm considers how late your payment is, so get the payment in as quickly as you can.

Here’s how the “lateness” of your payments are categorized: 30-days late, 60-days late, 90-days late, 120-days late, 150-days late, and charge off (written off at this point). Now, the longer it takes for you to pay the bill, the more damage is done to your score. Be sure you pay the bill before it progresses through to the “charge off” state so you avoid having the debt sent to a collection agency. At that point, the damage to your score will be much more severe and it will take longer to recover.

Other things that are considered include how much was owed, how many instances there are, and the recency of a late payment. As time goes by, the impact of a late payment decreases. This is also true of other major negative items such as bankruptcies, judgments, foreclosures, and liens.

How to Get More Score Mileage From Your Payment History

If you make a late payment and this is not like you at all, then call your issuer and see if they will give you a pass this one time. Have your excuse ready and stress what a good customer you’ve been for years (assuming this is all true!). It’s possible the issuer will not report your late payment to the credit bureaus.

But if your late payment does get reported – or worse, you have to overcome something major like a bankruptcy – get back on track immediately and pay all of your bills on time. Even a late utility bill could be reported to the bureaus, so pay every single bill on time.

Do whatever it takes to make sure you don’t forget to pay bills. Set up reminders on your calendar. Have a bill-paying party twice a month. Many folks automate their bill paying so they don’t let a bill slip through the cracks. To ensure success, choose a reminder method that you’re most comfortable with.


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