2022 Boise Idaho Real Estate Blog

Five Factors Of Credit Scoring -- Payment History

Main Boise Home Loans

35% of your credit score is calculated by payment history...the largest percentage in your credit report.

The largest portion of your credit score is derived from your history of on-time payments...or history of non-on-time payments. Late payments or missed payments are huge red flags to creditors, and just one 30 days late can wipe out 75-100 points from your credit score! The bad thing about this is that creditors don't care why you were late with payments...you may have had a medical emergency or lost your job, but they don't care. You will be red-flagged as a high-risk borrower simply because you were late on a payment.

The payment history portion of your credit score takes into account several factors:

1) Payment Information -- this includes payments on credit cards, department store cards, car installment loans, mortgages, etc. It includes the payments you made and the dates that the payments were posted by your creditors.

2) Delinquency -- this shows HOW late your payments are. A 30-day late payment hurts you, but a 60-day hurts more, and a 90-day hurts even more...etc.

3) Derogatory Public Records -- reports bankruptcies, judgments, tax liens, etc. The older the item, the less damaging it is to your credit score.

4) Past Due Amounts -- any amounts on open AND closed accounts that show past due will hammer your score.

Understand, the older your late payments are, the less they hurt your score. Late payment in the last 12 months will hurt you the most, but less severely after 24 months, etc. In the industry, we call this "seasoning."

Next time, I will discuss the unfortunate situation of Universal Default...the scenario by which all of your creditors come back at you for making a late payment to any one creditor.

Eric Leigh

Posted by Eric Leigh at 3/13/2009 4:51:00 PM

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