How important is payment history to your credit score?

Your payment history is the single most important factor in building a good credit score. What’s more, your most recent payments play an outsized role in your score, while payments older than a few years are less of a factor. Having a history of on-time payments shows lenders that you are responsible with your financial obligations.

The best way to understand just how important payments are to your credit score is to look at the impact of missing payments across many people’s credit files. Looking through our dataset of over a million anonymized credit files, we can see how important on-time payments are for your score.

The longer the on-time payment streak, the better for your credit score

Not surprisingly, a streak of on-time payments are important to your credit score. The longer, the better. Let’s start with reports that have only one credit account which was less than a year old. The accounts that had on-time payments for at least six months had a median credit score of 671. But, the accounts that had a year’s worth of on-time payments typically had scores that were 30 points higher. Credit reports with a single account and at least 24 months of on-time payments had a median score of 758. That’s huge!

Consistent on-time payments help build your credit score over time.

Chart showing showing the impact of on-time payments for one account has on your credit score over time.

Having more accounts will have a bigger impact on your credit score

A long credit history is good, but having more than one credit account with a good history can be a huge advantage — because each account has the potential for a separate payment to be reported. That means more overall payments recorded on your credit file. So, if you pay your credit card, mortgage, and car payment on time, all in a single month, that’s three on-time payments. Note that having multiple accounts of different types improves credit mix, which can also improve your score. 

Take another look at the data. With only one account and six months of payments, consumers had a median score of 671. But consumers that had six months of on-time payments on at least three accounts, had a median credit score of 725. Consumers with just one account would need their accounts be almost two years older to get the same median score.

Multiple credit accounts with good payment history can help increase credit score more quickly.

Graph showing the impact of 6-12 months on on-time payments on your credit score for the number of open accounts.

How do late payments affect my credit score?

Being a couple of days late with your lender likely won’t affect your score if you bring the account current within 30 days of the due date since, as lenders report to credit bureaus only when an account is 30 days past due. After 30 days, a late payment will hurt your credit score.

Even a single late payment reported to the credit bureaus will negatively affect your credit score, but it isn’t the end of the world for your credit score. The effect on your score is measured by how late you are. Being 60-days late is worse for your credit score than being 30-days late, and 90-days is worse than 60-days late.

Credit files that have an account that is 60-days late instead of just 30-days late are 27 points lower. And files that have an account that is 90-days late are 42 points lower than those that are only 30-days late. Taking care of a late payment as soon as possible can make all the difference.

Graph showing the impact of being past due has on your credit score.

How do consistent on-time payments repair damaged credit?

Life can throw anyone for a loop. Recovering from a late payment or a default takes time. Keep your head up and focus on your future.  All it takes is making consistent on-time payments. The most important factor in your payment history is what’s most recent — and you’re already working on that right now.

You should see your credit score begin to pick back up after just one month of keeping all your accounts in good standing. Stay consistent, and you’ll build your score along with a strong credit history month after month. The graph below shows just how consistently you could see improvement by extending an on-time payment streak. The impact of a late payment will fade, but your habits and attitude will stay with you for much longer. So keep building!

Graph showing the impact that a late payment has on your credit score over time.