How is a Credit Score Calculated: Chapter 3 – Payment History
Effect On Score
The topic of this chapter is not surprising. Your credit score relies heavily on your payment history. Obviously the more consistently you make your payments on time, the more you show your creditworthiness. When you miss payments, it’s the responsibility of the creditor to report those missed payments to the bureaus. They typically only notify the bureaus when your payment is 30 days or more late. When the notification is made, the late payment will be listed as 30 days , 60 days , 90 days , etc. Payment history represents 35% of your credit score, this is why it’s so important. One late payment can dramatically reduce your score especially if its high.
Keep in mind that late payments don’t just effect your score. Late payments also lead to late fees or increased APRs or loss of promotional 0% APRs.
Tips and Tricks
If you have a terrible credit score for one reason or the other one way of boosting it significantly is to find someone who has an excellent history and have them add you as an added user to their credit card. When this is done, it effectively allows you to get the FULL benefit of all of that person’s good payment history! This is a powerful and simple way to boost your score. To put the person whom your asking at ease, just tell them you want to be an added user, but you won’t take the card. This really does work, I’ve done it myself!
Stay tuned next week for the next chapter…