What Factor Has the Biggest Impact on a Credit Score?

Question: What factor has the biggest impact on a credit score?


The factor that has the most significant impact on your credit score is your payment history. According to the Fair Isaac Corporation (FICO), which is the most widely used credit scoring model, payment history accounts for 35% of your total credit score.

Understanding Payment History

Payment history refers to whether you have paid your credit accounts on time. It includes credit cards, retail accounts, installment loans, finance company accounts, and mortgage loans. Late or missed payments can significantly lower your credit score.

Here are some key points to remember about payment history:

  • Payment history includes the frequency and recency of missed payments. Recent late payments affect your score more than older ones.
  • Public records such as bankruptcy, tax liens, or judgments can also negatively impact your score.
  • Paying off a collection account will not remove it from your credit report. It will stay on your report for seven years.

Improving Your Payment History

Improving your payment history can help boost your credit score. Here are some steps you can take:

  1. Pay your bills on time: Even if you can only afford the minimum payment, it’s crucial to make your payments on time.
  2. Get current on missed payments: If you’ve missed payments, get current as soon as possible and stay current.
  3. Contact your creditors: If you’re having trouble making payments, contact your creditors to discuss possible solutions.
  4. Consider credit counseling: A reputable credit counseling agency can help you manage your debt and establish a budget.

Remember, improving your credit score takes time and there’s no quick fix. But by managing your credit responsibly over time, you can improve your credit score.

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