Your Payment History Is a Snapshot of You as A Borrower
Payment history is exactly that, a history of all of your credit accounts' payment information. This record includes how many times payments have been past due, minimum monthly payment, current amount owed, and original amount or credit limit.
Your payment history is added to your credit report as your creditors report it. Financial institutions send information on a regular, usually monthly, basis to the credit bureaus on the accounts you have with them.
Lenders are required to wait until a payment is 30 days past due before they can report it to the credit bureaus. Meaning you can avoid having it show up on your history if you pay the total amount in full, plus any applicable late fees, before it is 30 days past due.
Payment History Influences Lender Decisions
If your payment history shows multiple accounts with late payments or any accounts in collections, it shows prospective lenders that you may be a high-risk customer. Alternatively, having a solid credit history of on-time payments speaks to your creditworthiness.
The Better the Payment History, the Higher Your Credit Score
Both FICO and VantageScore, the two most common scores used by credit companies, use payment history as one of the biggest factors in credit scoring. Consumers with good scores have solid payment histories, which is the single most important thing any lender is looking for when considering an application.
If your payment history is full of missed payments or has accounts charged-off to collections, it will be very difficult to increase your score without improving your payment history.
Payment History Recovery Is A Slow Process
One of the biggest challenges in repairing your payment history is that it is a long process. The good news is you can start immediately by making on-time payments, even if it is only the minimum payment, to begin the journey to repairing your payment history.
If you consider your payment history as a percentage of on-time payments, one way to increase your credit score is by increasing the percentage of payments. The easiest way to do that is to make sure you make your payments on time, every time.
Ways to Improve Your Payment History
If you currently have more debt than you can pay off each month, you may want to call your card issuers to see if they can lower the interest rate temporarily. There are also loans available to consolidate your debt into a single payment if you need a way to pay off the other accounts.
If you are not carrying any debt, it may be worth considering putting a small purchase on your credit card that you pay off in full each month, so you can increase the number of on-time payments you have on record.
Is There Anything Else I Can Do To Fix My Payment History?
There are many steps on the path to increasing your credit score and reaching your credit goals. Some of these steps may be difficult to navigate on your own. That's why we created Credit Helpers! We are here to help you make the best decisions for your unique situation and are available no matter how high or low your credit score is. Call one of our experienced professionals to start your journey to better credit today.