Having a solid payment history is fantastic for boosting your credit score. In this post, we’ll cover what your payment history entails and what you can do to make sure yours looks strong.

What is your payment history?

Your payment history is the record of all your past payment information for all your credit accounts, including mortgages, car loans, personal loans, credit cards and any retail accounts where you buy something on credit.

The information tracked includes things like:

• Accounts you have paid on time
• Number of times you have been overdue on payments
• Total amount of unpaid bills you’ve had sent to collections
• How much money you still owe to delinquent accounts
• How much time has passed since you last had a delinquency or bankruptcy

Building a strong payment history

Maintaining an excellent payment history is very simple if you pay all your bills on time, every time. Of course, simple and easy aren’t always the same. We understand that life happens and people make mistakes or get behind.

Fixing a negative payment history

The first step towards turning a poor payment history around is to stop dwelling on the past. What’s done is done. Instead of lamenting your mistakes, start fresh with a commitment to doing things right moving forward.

1. Pay bills on time no matter what: If your payment history is struggling, you can’t afford to add new black marks to your record. Focus on making on-time payments on all your current debts. Your recent credit history weighs more heavily than old accounts.
2. Talk to your creditors: Creditors are often willing to help you renegotiate your debts, even if you’ve been delinquent in the past. Ask about having your interest rate lowered or renegotiating the terms. Creditors would rather help you pay the debt than have your default.
3. Consider debt consolidation: Speak with a credit counselor about consolidating your debts. Debt consolidation may save you money on interest payments but it can also help you get delinquent loans paid and off the record, therefore improving your payment history even if you still have the same total debt.

Why is payment history so important?

Payment history makes up such a big part of your credit score because it’s how lenders determine how likely you are to pay your loan back. If you’ve always paid on time in the past, it’s a good bet that you’ll continue to do so in the future. If you’ve often paid late or have fallen delinquent on loans, a lender might see you as a risk.

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