Payment History

This is the “willingness” section and shows if you've ever been late on an account, how much your payments are/were, what your past and present balances were/are, and whether you've ever exceeded your credit limit. Payment history is the single biggest factor when determining a credit score. It makes up 35 percent of your score.

That means up to 297 “points” can be awarded to your credit score since 35 percent of the maximum 850 is 297.

But what, exactly, is “late” when it comes to credit reporting? Being late means a payment that is more than 30+, 60+, 90+, and 120+ days late. It does not mean that if your car payment is due on the 15th and you paid it on the 16th then you had a late payment. Late payments will not hurt your credit score even up to 29 days past due.

Be forewarned; most revolving credit accounts will hit you with higher rates and penalties if you don't pay the minimum amount on or before your due date. But for the purposes of calculating a credit score for a mortgage application, the pain starts on day 31.

It also follows that your score will get hurt even more if you were more than 60 days past due compared to 30; 90 days past due compared to 60; and 120 days or more past due compared to 90. If your account got more than 120 days past due, then it's likely the account turned into a collection account, where the credit issuer has closed the account and is now trying to collect the balance owed.

A collection account will hurt your credit score more than a 120-day late payment. If collection efforts fail, then the credit grantor will likely “charge off” the account, which means it's given up on collecting directly. Then finally a business can take you to court and sue you to obtain a “judgment.”

A charge-off will hurt your score more than a collection. And a judgment will hurt your score more than a charge-off.

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