Payment History | The FICO Score Mini-Series

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Payment History Determines 35% of a FICO Score –

Welcome to our second post for The FICO Score Mini Series. Last week’s post was the introduction to the Series and if you haven’t already read it, I recommend you do that first.

Read it here >> Getting Started | The FICO Score Mini-Series.

In that post, I introduced Mary and shared her credit report and FICO score. Today we will pick up right where we left off by showing you how to move Mary’s Student Loan and Capital One Card from the “hurting bucket” to the “helping bucket”.

As I mentioned in the previous post, student loans (installment loan), and credit cards (revolving credit) are two types of credit that can make a positive impact while building your credit.

Student Loans
Alright, Payment History is 35% of your total FICO Score. This includes late payments. Everyone’s FICO Score is most effected by the most recent payments (in Mary’s case late payments).

The first thing a creditor or lenders wants to know is whether you’ve paid past accounts on time.

Details on late or missed payments

FICO Scores consider:

  • How late they were
  • How much was owed
  • How recently they occurred
  • How many there were

Public records and collection items:

These types of accounts are pretty serious. Yet older accounts with small balances have less negative impact on your FICO score.

Negative factors include:

  • Bankruptcies – can stay on your credit report for 7-10 years
  • Foreclosures
  • Lawsuits
  • Wage Garmishments
  • Liens
  • Judgments

Helping Bucket ~ 0 items | Hurting Bucket ~ 8 items

Take a look at the image above, you’ll see that Mary defaulted (didn’t pay) her student loans for 3 months in a row. Ouch!


If Mary had defaulted for 6 Months in a row, her student loans would have become delinquent (unpaid for 180 days) and would be given to a collections agency, giving Mary an even worse credit score. Also the collections account would likely stay on her credit report for 7 years.

So here’s the thing… Mary can take her student loans out of the hurting bucket and into the helping bucket by simply making her payments on-time for the next 2 or 3 months. Doing just that one thing will boost her score considerably and avoid collections.

Mary’s Capital One Card
Mary doesn’t have late payments on her Capital One Card. Yet it’s in the hurting bucket… do you know why? Look closely at her Experian Credit Report. You’ll see that her she has a balance of $1,900 and a limit of $2,000. She has maxed out her card. Maxing out her card falls under the Total Debt key category and equals 30% of her score. You can see that Mary’s two open accounts are not in good standing. Mary will see a big jump in her FICO Score by paying down her credit card balance to 30% of her limit. We will discuss Total Debt in our next post!

Stay thirsty friends


Inversion Credit

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