Payment History explained

Writer and editor - Bryan Robinson | Updated on 2023-01-11

Your payment history is one of the most important factors that lenders consider when they are determining your creditworthiness. In fact, payment history accounts for 35% of your FICO® Score—that’s more than any other single factor. So, what exactly is payment history and how does it impact your credit? Let’s take a closer look.

Your payment history is a record of whether you have made your payments on time, late, or not at all. This information is reported to the credit bureaus by your creditors, and it generally remains on your credit report for seven years from the date of the first missed payment. Payment history is such an important factor in your credit score because it is an indicator of future credit risk. In other words, if you have a history of making late payments, that’s a sign to lenders that you may struggle to make timely payments in the future. On the other hand, if you have always made your payments on time, that’s a good sign to lenders that you are likely to do so in the future as well.

The Impact of Payment History on Your FICO-Score

Your payment history has a very direct impact on your FICO® Score—late or missed payments will drag down your score while timely payments will help boost your score. The following table shows how late payments can impact your FICO® Score:

If you have… Your score could drop by…
One 30-day late payment 110 points
One 60-day late payment 130 points
One 90-day late payment 150 points
Two 30-day late payments 160 points
Three 30-day late payments 210 points

One collections account 100 points
foreclosure 350-850 points
bankruptcy
200-400 points
Chapter 7 bankruptcy 300-700 points

Notice that as the severity of the late payment increases—from one 30-day late payment to one 90-day late payment—the impact on your FICO® Score also increases. Additionally, having any kind of derogatory information—such as collections accounts, foreclosures, bankruptcies—on your credit report will also have a negative impact on your score.

The good news is that as time goes by, these negative items will have less and less impact on your score. Negative items generally remain on your credit report for seven years with the exception of bankruptcies which can remain for up to 10 years.


Conclusion

Your payment history is one of the most important factors in determining your creditworthiness—it accounts for 35% of your FICO® Score. So, it’s important to make sure that you always make your payments on time and in full. If you do find yourself with some late or missing payments, don’t despair; as time goes by, these negative items will have less and less impact on your score. Just remember to keep up with all your future payments so you can get back on track to improve your credit health!

Bryan Robinson

Bryan Robinson
Writer and editor


Read more about us »

Write a comment

All fields are required

Comment

Main menu