How Payment History Impacts Your FICO Score

The most important component of your FICO Score calculation

Tunji Onigbanjo


Photo by Shubham Dhage on Unsplash

Your FICO Score is calculated using different pieces of credit data in your credit report. The data is grouped into five categories to calculate your FICO Score on a scale of 300 to 850: payment history, amounts owed, length of credit history, new credit, and credit mix. The category of focus for this article is payment history, which is the most important component of your FICO Score calculation.

Payment history makes up 35% of your FICO Score calculation, which is why it is the most important component. Payment history shows how you’ve paid your accounts over the length of your credit history. When it comes to payment history, the goal is to have no late payments in your credit report, putting you on the path of having a strong credit score when it comes time for that loan product you want.

One or two late payments will not kill your FICO Score, but you should still aim to have no late payments. How do you ensure you do that? Pay your bills on time and pay your full monthly statement balances on all your credit cards. A positive payment history will lead to a positive impact on your FICO Score.

Maintaining a strong payment history will put you in a position to ensure you have low amounts owed, establish a strong credit history, establish a strong credit mix, and establish new credit when necessary. When it comes to keeping up with your FICO Score, I recommend Experian because they offer free access to your FICO Score and credit report using their data. Make things simpler for yourself, not harder.

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