Payment History

Full definition

Payment history is the single most important factor in the FICO scoring model, accounting for 35% of your score. It records whether you paid each credit account on time, and if not, how late. How lateness is categorized: Payments are reported in tiers - 30, 60, 90, 120, and 150+ days late. Each tier is progressively more damaging. A payment that is 29 days late does not appear on your credit report at all (though you may owe a late fee to the lender). The damage begins at 30 days. Score impact estimates: For a borrower with a 740 FICO, a single 30-day late payment typically causes a 60-80 point drop. For a 680 FICO, a 30-day late might drop the score 50-60 points. Scores below 640 are impacted less dramatically because the starting point is already distressed. How long late payments stay: A late payment remains on your credit report for 7 years from the date of the missed payment. However, the scoring impact fades significantly after 12-24 months as the late payment becomes older and is overshadowed by recent positive history. Autopay as the primary defense: Setting autopay for at least the minimum payment on every credit account is the single most reliable way to protect payment history. One forgotten payment during a busy period can take a year to recover from in scoring terms. Goodwill adjustment requests: If you have an otherwise excellent payment history and miss one payment due to a hardship, calling the lender and requesting a 'goodwill adjustment' (removing the late mark from credit reporting) is worth attempting. Some lenders will do this once for a long-standing customer in good standing.

• Credit score
• Hard credit inquiry
• Credit report
• FICO score