Payment history tips

Did you know that the most important thing you can do to keep your credit score in good shape is to pay your bills on time? Credit history accounts for 35% of your FICO credit score. Making just one payment more than 30 days late could result in a drop in your score and a negative mark on your credit report that lasts seven years.

Happy woman paying credit card statementFICO defines your payment history as the track record for payments made on credit lines and loans that appear in your credit report. Before payment history can appear on your credit report, the company must report it to at least one of the three credit bureaus.

Here are some examples of the types of accounts that report payment history to credit bureaus:

  • Car loans
  • Student loans
  • Retail credit cards
  • Credit cards like Mastercard, Visa, Discover, etc.
  • Mortgages
  • Personal loans
  • Boat, ATV, and camper loans

Here are some examples of the types of debts that can hurt your credit score:

  • Unpaid collection accounts
  • Medical debts in collections
  • Defaulted student loans
  • Repossessions
  • Mortgage defaults
  • Utility accounts like cell phone contracts, Internet service, cable TV service, and electric service that go to collections for nonpayment.

A missed payment will affect your credit score. How much it affects your score depends on how much money you owe on collection accounts, how much time has passed since you made the late payment, and how late it was.

In general, newer information carries more weight with credit bureaus than older information. For this reason, even if you’ve had past credit problems, it’s crucial to get back on track and begin paying bills on time right away.

Typically if you have a payment on your credit report that’s 60 days late, it does more damage than a payment that’s 30 days late, and so on. People who have a number of late payments in their credit file may simply need to make all payments on time and let time work its magic. If your credit score is a priority, making every payment on time is one of the most important things you can do.

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