Your credit score is composed of five factors: types of credit, payment history, amounts owed, length of credit history, and new credit. To help you better understand the components we will cover one each week. To start we will be covering payment history.
Payment history is the most important component as 35% of your credit score is made up of your payment history. It is rather encompassing as it includes all of your current on-time payments as well as Late Pays, Collections, Charge-Offs, Repossessions, Foreclosures, Tax Liens, Bankruptcies and Judgments.
Two examples; a recent 30-day late can cost 50+ points and paying a collection that is more than 2 years old can hurt a score.
Next week we’ll cover Amounts Owed and how they can affect your credit score.