Ashley Effinger Want to level up your credit game? It’s all about your payment history. Yep, how good you are at paying your bills on time can make or break your credit score. So let’s dive into how you can improve your payment history and give your credit score a nice little boost.
How payment history affects your credit score
Here’s the deal: your payment history is the biggest factor that affects your credit score, specifically your FICO Score.
In fact, payment history is responsible for about 35% of your credit score.
So if you want to rock a strong credit score, you’ve gotta make sure your payment history is spotless. Seriously, nothing hurts your credit score more than a late or missed payment (except for major credit disasters like foreclosure or bankruptcy).
How late is a late payment?
When it comes to your credit reports and scores, a late payment is any payment that’s 30 days overdue. And trust me, that first late payment can really do a number on your credit score. It’ll stick around on your report for a whopping seven years.
But hey, don’t stress too much because its impact lessens over time.
Now, here’s a little tip: even though lenders won’t report a payment that’s just a few days late, they might hit you with a penalty for missing the due date.
So make it rain on time, my friend. Pay those bills when they’re due!
So, what bills actually count towards your payment history?
Well, we’re talking credit cards, other lines of credit, and installment loans. Those all have a big influence on your credit.
When it comes to credit cards, paying at least the minimum before the due date is crucial. And if you go above and beyond and pay more, you’ll save on interest charges and possibly boost your credit score. Plus, paying on time means no late fees or penalties. Winning!
Oh, and don’t forget about installment loans. Your mortgage, student loans, and auto loans all fall into this category.
Make those monthly payments like a boss, and your credit will thank you. Even after you finish paying off an installment loan, its payment history will still benefit your credit for a while.
And here’s a little something extra for you – in-store financing can also make its mark on your credit. So if you’re buying that new couch or flashy gadget on a payment plan, those payments might show up on your credit report. Just another way to boost your credit scores, my friend.
Do non-debt payments affect payment history?
Now, let’s talk about non-debt payments. Paying rent, utility bills, and cellphone bills won’t automatically skyrocket your credit scores. But, some landlords and property managers are starting to report rent payments to the credit bureaus. So if that’s the case, it could have an effect on your payment history.
And be careful – if you don’t pay a bill and it gets sent to collections, it’ll definitely bring your credit scores down.
Want a little trick to level up your credit scores even more?
Enroll in FreedomPath’s credit repair program and your utility, cellphone, streaming service and rent payments can be included on your credit reports. If you’ve been making those payments on time, it can give your FICO Scores a boost. Cha-ching!
Want to boost your payment history?
Here are some killer strategies to keep it solid or fix any past mishaps:
- Pay on time, every time. This one’s a no-brainer, but seriously, paying your bills on schedule is the key to a rockstar payment history. Late payments from the past may haunt you, but their impact fades over time. So, if you keep up the good work and avoid new slip-ups, your credit scores will soar.
- Call out incorrect payments. If you’ve been labeled as a late payer but you know it’s not true, don’t just take it lying down. Reach out to your lender or get into the credit report dispute process. Show ’em the receipts and set the record straight!
- No underpayment allowed. Late payments can really mess up your payment history, but even partial payments can be a stain. If you can’t make the full payment, at least throw something their way. But be warned, underpaying still hurts. If your credit card payments are a struggle, put them on the shelf for now and focus on paying off those balances. For loans, talk to your lender before submitting a partial payment. They might cut you some slack and give you new terms, even if it means paying more overall. It’s a trade-off, but it’ll save your payment history!
- Make paying bills a habit. If you have trouble remembering when to pay your bills, set a regular day just for that. Maybe it’s the last Sunday of the month for all bills due in the upcoming month. Write it down and stick to it.
- Call in the tech cavalry. You’ve got all sorts of technology at your disposal, so use it to your advantage. Set up automatic bill payments with your bank (autopay) to dodge late payments. Use digital calendar reminders, credit card issuers’ smartphone apps with handy alert features, or even virtual sticky notes. Embrace the tech that keeps your payments on track, and you’ll be a financial superhero in no time.
Now, let’s talk about the perks of paying your bills on time:
Boost your credit scores like a boss
Consistently making those payments is a surefire way to build up your credit. As your scores rise, lenders see you as less of a risk, which means better loan options, higher credit limits, and lower interest rates and fees. Your credit game will be strong!
Say no to penalties
Missing a payment can lead to nasty fees or penalties as per your loan or credit card agreements. Sure, you might be able to sweet-talk your way out of the first one, but those fees can pile up. Plus, they can even add interest charges to your balance. Save yourself the trouble and just pay on time.
Bye-bye stress
Without a system, bill payments can become a never-ending source of anxiety. Constantly worrying if you missed one, scrambling to transfer funds at the last minute – it’s a mess. But taking control of this manageable task will bring peace of mind and make your life a whole lot calmer.
Maintaining a solid payment history can give you peace of mind and supercharge your credit scores.
And here’s a bonus tip: check your credit score from all three credit bureaus and report daily with FreedomPath’s DIY credit restoration software. It’ll show you how improving your payment history can make a world of difference.
Keep paying on time, take care of everything else that affects your scores, and enjoy the satisfaction of monitoring your credit. You’ve got this!
So there you have it. Payment history is a big deal when it comes to your credit scores. Keep those payments on time, avoid late fees, and let the credit powers that be shine down upon you. Happy credit building, my friend!
