What Is Payment History And How Does It Affect Your Credit Score?
Your payment history is usually one of the main factors taken into account when calculating your credit score, as it tells a lender or creditor how you have repaid your credit previously.
It reflects how many payments you have had to make in the past and how many of those were paid on time, often as an overall percentage, and then can go into details about any missed payments, how late any late payments were, how much was owed any bankruptcies, and other collection information.
Credit scoring models generally consider as much information as is available, and so will take into account a number of previous loans and credits such as:
- Credit cards
- Student loans
- Mortgage loans
- Home equity loans
- Retail department store accounts
- Finance company accounts
- Instalment loans
- Auto loans
Because of how much data is taken into account and how telling your previous payment history can be if you have any recent late payments or are consistently late with repayments, this section can have a big impact on determining your credit score and how likely you are to receive further credit.
If you haven’t been the best with repayments in the past, you can always improve your payment history for the future by being consistent with your payments and trying to pay them before they are due you can. Try to set reminders or alarms to help you organise your payments and keep on top of bills. This will not instantly solve your problems as missed and late payments do stay on your record for a long time, however, more current information is evaluated above older payment history so over time you can definitely improve your payment history and credit score.
Has our credit score series made you curious to know more about your credit score?
You can access a detailed copy of your own credit report through CheckMyFile.*
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