It happens to the best of us.
Now youve received a notification that your credit score has dropped.
Your payment history makes up 35% of your entire credit score.
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Probably not as good as youd like.
It always seems like an uphill battle to build (and keep) a decent amount in savings.
But what if your car breaks down, or you have a sudden medical bill?
Ask one of these companies to help…
Can you fix your credit?
How long does the missed payment stay on your file?
How Does Payment History Affect Your Credit Score?
Your credit score is a three-digit number that usually ranges from 300 to 850.
A score between 300 and 550 is considered bad, while a score above 700 is considered good.
But how does payment history factor into your score compared to other influences?
If not, its hard to determine whether or not youll be able to manage a new credit product.
This could lower your score.
Have you recently gotten a new credit product?
If so, you could be less suitable for an additional new credit product.
This could lower your score.
Are you a new credit customer?
Without a long history, its hard to determine if youre creditworthy.
This could lower your score.
Do you carry high balances on your credit products?
If so, a new loan might make you more at risk for missing payments on all of them.
This could lower your score.
Have you typically made your payments on time?
If not, this could lower your score.
Put simply, if you miss payments, your score could decline.
But thats only part of the story.
What Makes Up Your Payment History?
First, its important to remember that your payment history is just that a history.
Instead, it can take between 30 and 60 days for any changes to take effect.
At the same time, its a history that reaches far back into the past.
(That rumor about gum is false, incidentally.
Any of these has the potential to impact your score.
Both operate in the same way when it comes to your credit, acting as an installment loan.
Any late payments will affect your history.
These are serious issues that youve experienced in the past and are known as derogatory records.
Bankruptcy
Filing for bankruptcyis an awful experience in itself.
Not only does a bankruptcy stay on your file, but it has a substantial impact on your score.
In fact, after filing bankruptcy, most people will have a credit score below 550.
Worse yet, a derogatory collections flag can stay on your file for seven years.
How Late is Too Late?
You start in good standing at level 1.
Can a Late Payment Be Fixed?
The good news is…sometimes.
In general, you have three ways to have negative payment information removed from your payment history.
The bad news is that the quickest ones are only useful in specific circumstances.
No system is perfect, and sometimes your payment status is reported to the credit bureau incorrectly.
It can take persistence, unfortunately, but with evidence, your chances are good.
But You May Have to Wait it Out
Sorry.
In every other circumstance, the only way to clear negative reports on your payment history is to wait.
This is why its so important to actively maintain your credit: Prevention is the best defense.
Whats the Best Way to Prevent Missing Payments?
It can sometimes be difficult to keep up with your bills.
Use Less Credit
OK, this one is cheating but it makes sense.
Set Up Auto Pay
For those with a consistent income, this is a godsend.
Keep in mind, though, that this can train you into bad behavior.
Check Your Credit
Remember how I said that creditors sometimes make mistakes?
The best way to hold them accountable is by knowing your own credit.
Through December 2022, youreentitled to a free credit reportfrom each of the three major credit bureaus every week.
No Interest Til Almost 2027?
Balance Transfer = Credit Card Cheat Code
