Payment History And Your Credit Score – What You Should Know

There are few triple digit numbers that can strike fear in the hearts and minds like a numerical result known as ‘your Credit Score.’ This unassuming combination of numbers can unlock the American Dream, provided that they line up in the right sequence.

What is a credit score, anyway?

Well, in layman’s terms, it’s a numerical representation of your credit worthiness, based on an analysis of several key components. Its result can determine your bounty. If your credit score is positive, you will have a harvest of opportunities. If your credit score is fragile, it will be the poisoned apple of the fruits of your labor.


But how does one become an expert landscaper when it comes to growing this magical statistic? Much like a good garden, the answer is in the soil of your financial movements. A lot of nutrients make up the foundation and sorting through it can get a little muddy.


In this series of deep dives, we’ll explore a few of the significant factors that impact your credit score to help ‘demystify the dirt.’ Staying on the right side of the fence of these scenarios can be the difference between owning your own home and being unable to secure the loans that will help you buy it.


To kick off this first installment of our credit tips series, let’s take into consideration one of the most significant influences on your credit score. Yes, we are going to talk about Payment History.

Payment history – It’s heavy, man

Did you know that Payment History makes up 35% of your credit score health?? 35%! In fact, it’s one of the major factors in the calculations to determine credit worthiness. Based on research, it has shown to be one of the most significant predictors of whether you’ll be a good candidate to pay your debts in a timely manner.


Think about it this way:

Imagine that Payment History is a mighty oak in the forest of your credit assessment. Sprouting off the trunk are the branches creditors look at to determine the risk of building a proverbial tree house on your back. A few of these branches can be:

  • Credit Cards – These are your big branches…these include cards like MasterCard, Visa, Discover, and American Express.
  • Loans, Loans, All Types of Loans – Mortgage, car, student…basically any loan where you have a debt to which you make regular payments.
  • Retail Accounts – You know, the store that have their own credit cards? The ones where they promise “20% off our purchase instantly if we SIGN UP NOW!” (I’m looking at you, Target!)
  • The Bad Apples – These limbs are the darker ones in the leafy canopy. The bad apples include bankruptcies, lawsuits, or wage garnishments/attachments that you may be harvesting.

What other payment history helps determine a credit score?

But your credit gardeners are not simply looking at your leaves. From there, they examine your financial roots. After all, this is where those shoots are pulling their nutrients from. And this is where your Payment History story is told.


As they start to dig, they are looking at:

  • The amount of your accounts you are paying as agreed
  • How much of your debt has been paid on time vs how much is delinquent
  • How relevant is your delinquent payment history. Are they small missteps that happened in the past or recent mistakes still occurring?
  • The number of accounts impacted by irregular payments
  • The amount of money that is still owed – And of the debt you are carrying, how much have you satisfied vs how much do you still owe
  • How many of the roots are made up of negative public records (bankruptcies, garnishments)


The roots and the branches will determine how healthy your Payment History tree will actually be. It will be the difference between tree house or kindling.

How can payment history improve a credit score?

With the significance of what this mighty oak represents to your financial forest, how do you ensure that you’re keeping your thumb evergreen? It’s actually not that complicated. If you develop these habits as you garden, you’ll be on the path to harvesting a good-standing credit score. These healthy habits can include:


  • Pay Your Bills on Time!! This sounds so obvious and can be easier said than done sometimes, especially if you’re already in a financial hole. But this stone cannot be skipped on the road to financial and credit success.


Taking steps to being able to pay your bills can include setting a budget, eliminating unnecessary purchases, and building a humble savings. Each empowering move in this arena will contribute to timely payments, which will equate to good marks on your payment history.


  • Get Current and Stay Current: If you’re carrying past-due debt, don’t discount the importance of clearing that field. While true that the older the credit problem, the less it impacts your score, past-due rubble in your path will make it hard to plow forward. Consistency in paying past-due bills also positively builds your payment history.


  • Don’t be afraid to ask for help: If the financial well you’re in is making it hard for you to tend to your crops, consider contacting specialists. This can include working with your current creditors to pay off your debt. You can also reach out to credit counseling services to assist you with everything from budgeting to consolidating.


We understand that the woods of credit history can be deep and dark if exploring on your own. We’re here to help guide you to your garden of financial freedom.


To find out more about how we can help you harvest a strong credit score, give us a call. And stay tuned for more installments on how to keep your credit score blooming.