Payment history shows how you've paid your accounts over the length of your credit. This evidence of repayment is the primary reason why payment history makes up 35% of your score and is a major factor in its calculation. Research shows that your track record of payment tends to be the strongest predictor of the likelihood that you'll pay all debts as agreed to. And as you can imagine, a lender's number one priority is your past record of paying back (or not) your loans.
A few late payments are not an automatic "score-killer." An overall good credit history can outweigh one or two instances of late credit card payments.
However, having no late payments in your credit report doesn't mean you'll get a "perfect score." Your payment history is just one piece of information used in calculating your FICO Scores.
Types of accounts considered for credit payment history
Account types considered for credit history could include:
- Credit cards (Visa, MasterCard, American Express, Discover, etc.)
- Retail accounts (credit from stores where you shop, like department store credit cards)
- Installment loans (loans where you make regular payments, like car loans)
- Finance company accounts
- Mortgage loans
Bankruptcy public records and collection items
These types of events are considered quite serious, although older items and items with small amounts will count less than recent items or those with larger amounts.
Negative factors include:
- Bankruptcies - Bankruptcies will stay on your credit report for 7-10 years, depending on the type
- Collections - Third party collection accounts stay on the credit report for seven years from the original delinquency date of the original debt or the date of the first missed payment, after which the account was no longer brought current. You may see both the collection account and the account with your original creditor on the credit report.
Components that make up your payment history:
- Payment information on credit cards, retail accounts, installment loans, mortgages and other types of accounts
- How overdue delinquent payments are today or may have become in the past
- The amount of money still owed on delinquent accounts or collection items
- The number of past due items on a credit report
- Bankruptcy public records
- The amount of time that's passed since delinquencies, bankruptcy public records or collection items were introduced
- The number of accounts that are being paid as agreed
Tips to enhance your payment history.
The tips below might sound a little obvious, but reading them might help give you that push to make that first move. Payment history can be improved upon, but there's only one person who can do that... You. Here's how:
- Pay bills on time. Sounds simple, and easier said than done, but it's the best way to start getting your payment history back on track. Set up a budget to ensure you have the money necessary to pay your bills on time. It might mean some sacrifices, but better to give up a few things now than to ruin your credit for a lifetime.
- Get/stay current on missed payments. The older a credit problem, the less it counts toward your credit score. So the longer you pay your bills on time, even after having late payments, the more potential for your FICO Scores to increase.
- Contact creditors/get help. Contact your creditors to see if they can help you in any way, like lowering your interest rate so you can pay off your debt faster. You can also meet with a credit counseling service who might be able to assist you with properly budgeting your money and consolidating your debts — all potentially help you improve your credit history.
Payment history is the biggest score factor, so it's important to pay close attention to it and make sure your bills are paid on time. Read next about amount of debt and how that factors into your FICO Scores too.
FAQs
Payment history (35%)
How can payment history affect your credit score? ›
What is Payment History? Payment history shows how you've paid your accounts over the length of your credit. This evidence of repayment is the primary reason why payment history makes up 35% of your score and is a major factor in its calculation.
At what percentile rate does payment history impact your credit score? ›
FICO® Score Factors
FICO considers scoring factors in the following order: Payment history: 35% Amounts owed: 30% Length of credit history: 15%
Is payment history the biggest factor affecting a person's credit score? ›
1. Payment History: 35% Your payment history carries the most weight in factors that affect your credit score, because it reveals whether you have a history of repaying funds that are loaned to you.
Is a 96 payment history good? ›
98% – Fair. 97% – Poor. <97% – Very Poor.
How much do on-time payments affect credit score? ›
Your payment history—whether you have paid your bills on time or late—has the greatest impact on credit scores. However, it typically accounts for less than half of your score, usually between 30% and 40% of the total. Several other factors also are critical to being a good credit risk and having good credit scores.
What is considered good payment history? ›
This may seem obvious, but the key to a solid payment history is paying your bills on time, every month, without fail. Late payments in your past can't be taken back, but their effect will diminish with time, so if you move ahead without new missteps, your credit scores and standing will tend to improve.
How to get a late payment removed? ›
Ask the lender to remove it with a goodwill letter
This is a straightforward way to potentially get a late payment removed from your credit report. In some cases, creditors are willing to make a goodwill adjustment if your payment history has been good or if you have a good relationship with them.
How rare is an 800 credit score? ›
According to a report by FICO, only 23% of the scorable population has a credit score of 800 or above.
How rare is a 780 credit score? ›
A 780 FICO® Score is above the average credit score. Borrowers with scores in the Very Good range typically qualify for lenders' better interest rates and product offers. 25% of all consumers have FICO® Scores in the Very Good range.
Your score falls in the range of scores, from 800 to 850, that is considered Exceptional. Your FICO® Score and is well above the average credit score. Consumers with scores in this range may expect easy approvals when applying for new credit. 21% of all consumers have FICO® Scores in the Exceptional range.
How to get payment history back to 100%? ›
How to Improve Your Payment History
- Always pay your bills on time. The number one way to improve your payment history is to always make on-time payments. ...
- Get and stay current on any missed payments. ...
- Follow a debt management plan. ...
- Communicate with your creditors. ...
- Consider a debt consolidation loan.
Payment history is the most important factor in maintaining a higher credit score as it accounts for 35% of your FICO Score. FICO considers your payment history as the leading predictor of whether you'll pay future debt on time.
How long does it take to improve payment history on a credit report? ›
Average score recovery time by type of event
| Event | Average credit score recovery time |
|---|
| Missed or defaulted payment | 18 months |
| High credit utilization | 3 months |
| Hard credit inquiry | 3 months |
| Late mortgage payment (30-90 days) | 9 months |
2 more rowsJun 16, 2024
Payment history: ~35%
Your credit history will also detail how many of your credit accounts are delinquent in relation to all of your accounts on file.
Will removing late payments increase credit score? ›
But, like other negative records, defaults don't stay on your credit forever. Depending on several factors, you may see an increase in your scores when the default is removed.
Is payment history more important than credit score? ›
The most important factor of your credit score is payment history. Here's how to master it and the other four factors to get a good credit score. Credit scores provide lenders a holistic look into your financial history, but there's one factor that matters the most.
Why did my credit score drop 40 points after paying off debt? ›
It's possible that you could see your credit scores drop after fulfilling your payment obligations on a loan or credit card debt. Paying off debt might lower your credit scores if removing the debt affects certain factors like your credit mix, the length of your credit history or your credit utilization ratio.
How can I raise my credit score 100 points in 30 days? ›
For most people, increasing a credit score by 100 points in a month isn't going to happen. But if you pay your bills on time, eliminate your consumer debt, don't run large balances on your cards and maintain a mix of both consumer and secured borrowing, an increase in your credit could happen within months.
Is it true that after 7 years your credit is clear? ›
In general, most debt will fall off of your credit report after seven years, but some types of debt can stay for up to 10 years or even indefinitely. Certain types of debt or derogatory marks, such as tax liens and paid medical debt collections, will not typically show up on your credit report.
FICO Scores are calculated using many different pieces of credit data in your credit report. This data is grouped into five categories: payment history (35%), amounts owed (30%), length of credit history (15%), new credit (10%) and credit mix (10%).
How long does it take for payment history to improve on a credit report? ›
Average score recovery time by type of event
| Event | Average credit score recovery time |
|---|
| Missed or defaulted payment | 18 months |
| High credit utilization | 3 months |
| Hard credit inquiry | 3 months |
| Late mortgage payment (30-90 days) | 9 months |
2 more rowsJun 16, 2024
Length of credit history makes up 15-20 percent of your credit score. It takes time and responsible use of credit accounts to build a long credit history. Negative information, such as missed payments, can have a bigger impact on your credit score than a young credit report.
Why is my credit score going down when I pay on time? ›
Using more of your credit card balance than usual — even if you pay on time — can reduce your score until a new, lower balance is reported the following month. Closed accounts and lower credit limits can also result in lower scores even if your payment behavior has not changed.
