The impact of your payment history on your credit score

Credit score A financial mantra that sounds easy to follow is “pay your bills on time.”. Personal finances sometimes get put on the back burner, especially when life doesn’t go as planned.

Your credit score may not be irreparably damaged by one or two slip-ups. But you might want to know how late payments affect your creditworthiness.

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Payment history: what is it?

  • The payment history shows when you have made on-time, late, and missed payments on past and current credit accounts. Credit cards, lines of credit, personal loans, and mortgages are examples of these accounts.
  • Your payment history indicates to a potential lender whether or not you are likely to repay your debt.
  • Additionally, it contributes to a significant part of your credit score. Although how much it contributes isn’t clear – scoring models like to keep their algorithms close to their chests.
  • However, FICO claims that 35% of your FICO Score is based on your payment history.

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In my payment history, what’s not included?

The payments you make on a recurring basis – such as a monthly office or apartment rent payment – aren’t typically recorded in your payment history. The same is true for payments to electric and water utilities or for maintenance services such as home or office maintenance.

You could hurt your credit score if you don’t pay these bills and your unpaid debts end up in collections or legal proceedings against you.

What effect does my payment history have on my credit score?

  • A potential creditor or lender will usually check your payment history to see if you’ve ever missed a payment. Too many late payments can affect your credit score.
  • The impact of late payments on your credit score is greater. The longer it takes you to repay your obligations, the more negative your score will be.
  • However, a payment history that’s free of late payments does not ensure a high score. If your financial history is otherwise stellar, a few late payments will not negatively impact your credit score.
  • Your credit score is calculated by credit bureaus based on several factors, often with proprietary algorithms.

What factors do creditors and lenders consider when weighing late payments?

Banks and lenders also consider the following factors when focusing on late payments:

  • You were late with your payments. Late payments are generally reported as 30, 60, and 90 days late. A higher number indicates a more severe negative impact on your credit score.
  • Your most recent late payment. Your credit score might not be affected much these days if your late payments were grouped years ago.
  • Amount of late payments. You might have a lower credit score if you have paid more bills late.
  • The amount you owed. The larger the amount, the greater the impact on your credit score.

Publicly available bankruptcies, foreclosures, liens, and lawsuits are also taken into account.

My payment history is reported by whom?

  • The three major credit bureaus receive information about your open accounts, including your payment history, from your creditors: Equifax, Experian, and TransUnion.
  • The credit bureaus weigh that information differently, using an algorithm to determine your credit score.
  • There are lenders who do not report to all three credit bureaus, which results in variations in credit scores depending on the bureau.

When do credit reporting agencies report late payments?

Creditors and lenders can generally report late payments of 30 days or more to credit bureaus. Most creditors will give you more time to pay your obligations if you have a good relationship with them.

In the event of 90 or more days of late payments, a lender may charge off your account and send it to collections. Your credit score can be adversely affected for years by collections on your payment history.

Do these negative marks stay on my credit report for a long time?

You can have late payments and other black marks on your credit report for up to seven years. Bankruptcies can stay on your report for up to ten years.

The fact that your credit report or payment history isn’t perfect doesn’t mean you won’t be able to get a loan or credit card before these seven years are up. It depends on the creditor whether you are considered a low credit risk.

Here are four ways to remove late payments from your credit report

There are four ways to remove late payments from your report:

  1. Goodwill letters should be written. You can ask a creditor for a goodwill adjustment if you have a positive relationship with it. The late payment is “forgiven” and removed from your credit report if the bank agrees.
  2. Sign up for automatic payments. Providing your creditor with assurances that you will make regular payments in the future may allow them to overlook a late payment.
  3. Please do not hesitate to file a dispute. Get the late payment removed from the credit bureau if it shouldn’t be there, to begin with. Respond within 30 days.
  4. Credit repair professionals can assist. You can repair your credit report and remove the late payment with the help of a credit repair company.

What should I do if I know I will be late with a payment?

  • If you pay before your due date, you’ll probably be fine. Lenders usually report late payments 30 days after your due date.
  • If you’ve hit a financial roadblock and know you won’t be able to pay your creditors, you should contact your creditors as soon as possible. Tell them when you expect to be able to pay. Even a partial payment is a sign of good faith.
  • They want a straightforward payment schedule because they don’t like late payments. When you contact them, you are taking responsibility for your obligation, even if you are unable to fulfill it at the time.

Keep track of your payment history with these tips

You may already be familiar with most of these tips, but here are a few you may not have considered:

Be sure to pay your bills on time. If you must be late, try to settle your debt within 30 days of the due date.
Set up a monthly reminder. This will prevent you from forgetting to make a payment.
Set up automatic payments. Never worry about late payments again. Don’t forget to keep sufficient funds in the account you’re pulling from.
Your due dates should be moved. Depending on your salary schedule, your creditor may be willing to adjust when bills are due.
Be responsible with your spending. Your loan and credit card balances should be low or easily manageable.
You should monitor your credit reports. Dispute inaccurate information with the credit bureau if you find it.


Potential creditors and lenders use your payment history in determining whether to take you on as a borrower based on your record of successful, late, and missed payments.

Additionally, the information within it contributes significantly to your credit score. Your credit score will improve or remain stable if you pay your outstanding obligations on time. A strong credit score often translates into more competitive interest rates and terms when you apply for a loan or credit card.