This is the second part of my Credit Series, where I explain the most important aspects of credit, credit reports, and credit scores. Each installment focuses on one factor influencing credit, tools to monitor and improve credit, or an explanation of a specific credit concept.
The most significant factor in your credit score is your payment history, which accounts for 35% of your score. This information can be found on your credit report and includes each of your credit accounts and details about how you have paid.
The payment history section of your credit report contains the following information:
- The name of the institution reporting the information. This is often a bank or credit card company.
- The date opened as well as the date of reporting.
- The type of account (revolving account, educational loan, auto loan, mortgage loan, etc.)
- The credit limit or loan amount and the highest amount ever charged on the credit account.
- The balance as of reporting and the amount past due (if any).
- The account status (current, past due, charge-off, etc.) and the monthly status for previous months.
- The terms of repayment (for loans) or “revolving” (for credit accounts)
- The Account number, which may be shortened or scrambled.
- The Adverse public records (bankruptcy, judgement, suits, liens, etc.), collection accounts, and delinquency accounts.
While FICO keeps secret how they score exactly, we do have some information about factors on the payment history section that affect your credit score. The more recent your transgression, the more your score will suffer. Negative information can stay on your report for up to 7 years and could have a serious negative impact on your credit score.
In order to earn the maximum number of points in this category, you must make all payments on time and avoid collections or public information from appearing on your account.