• Your Payment History

    Your Payment History

    January 23, 2009

    There is no bigger item that could effect your credit score.  Why?  Creditors want to know that they will be paid on time.  Also there is a direct correlation between individuals that pay late and individuals that default on a loan.

    Currently, your payment accounts for 35% of your FICO score.  It has the largest weight in your score compared to all other factors.  Negative factors in your payment history can be the quickest way to ruin a score and should be avoided at all costs.

    Many considerations are made regarding late payments and all are interdependent when calculating this portion of your FICO score.

    • Recency – a confusing word, define to be how recent was the last late payment.
    • Severity – how late was the payment.  The longer the more negative.
    • Frequency – how often are late payments made.
    • Amount – the total amount of delinquencies
    • The accounts that were paid that were in delinquency

    There is no explained way on how these factors interact with each other to make up 35%, but they can be listed on your credit report for up to seven years.

    The rule here don’t pay late.  It sounds simple but late payments are very common on everyone’s credit report.  A conscience effort must be made to ensure payment are sent in on time.  This could be done through the use of online banking or a strict budget.

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User Comments

  1. […] Pay your bills on time.  This is the best answer to how to raise your credit score.  Why?  Your payment history makes up the largest part of your credit score.  Nothing is a more of sign of potential default […]

    February 22, 2009 Pingback by How to Raise a Credit Score | Financially Tough@

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