Improving Credit | Your Payment History

Your payment history, also known as performance pay, is the record you have established either by paying or not paying your bills on time. This story is recorded on your three credit reports that reside in the three U.S. agencies credit reporting: Equifax, TransUnion and Experian. Your credit reports will reflect your payment history on a credit account that you have had in the 7 to 10 years. This includes but is not limited to, student loans, mortgages, banking and retail credit cards and also auto loans.

Does my credit reports know if I pay my bills on time or not?

In other words, no they do not. But, your lenders whether or not you pay them on time will definitely make your payment history to credit reporting agencies good or bad. This is a process called "lender reports" in which your lender will send the three credit reporting agencies of the current status of your account each month via an electronic tape. Once received by the credit bureaus of this tape is loaded and run on their databases creating an updated record of your account month after month.

The data that lenders report each month is usually based on the activity that took place on this account during the previous billing period. As such, at any time based on your credit reports will display data that is 30-60 days. The following componentsof your credit report reflects your payment history.

Your current situation - Your current status is the classification of your accounts from the last time they were reported to credit bureaus by your creditors. The best "status" you can have on any account is "paid as agreed." This means that the account is paid under the terms of the agreement you signed with the creditor. If your account is overdue then your rating reflects the current situation as such. The current status is usually displayed as a numeric value ranging from 1 to 9. If your account is paid as agreed then the note will be a "1". Essentially any other identification mark of a "1" is bad. And, as noted by digital rises from 2 to 9, there is a worsening level of crime into account.

* Your lenders are responsible for allocating and report on the status of a digital account. They each have policies that govern when they begin to declare a status other than 1. Some lenders choose to be more consumer friendly and not declare a state of more than 1 until the consumer gets several months behind. Other lenders alert you with a past due status of the day you become delinquent. Everything depends on the political relations of the lender.

Before late payments - Before late payments are a record of all late payments on ahistorical account. If, for example, you forget your auto loan payment this month you should expect to see more information about this failure to pay on your credit reportthe next time your automatic updates lender with your account information the threecredit reporting agencies. If you subsequently make payment and become "paid as agreed" on the account, then your lender will change to show the account as paid on time, but with an advance payment late. If you miss a payment for two consecutive months, your lender report two late payments. This trend will continue until the account is paid and marked as "active" by the lender.


As with all items on your credit reports there is a statute of limitations governing the amount of time that late payments may continue to be reported. Before late payments remain on your credit report for a period not exceeding seven years from the date they were reported. The credit reporting agencies program their systems to automatically remove late payments on or before September just before their anniversary. As such, it is not necessary for consumers to request their removal.


Narrative codes - A little known area of concern that can have a huge impact on your credit card is the English text that describes your accounts. These are called narrative codes. Narrative codes are located alongside lists of accounts in your credit report. There are dozens of narrative codes with the latter being the most common:

Narrative Codes Follow:

• Home equity
• Real estate mortgage
• Line of Credit
• Credit Card
• Paid account / zero balance

Narrative codes can either have a neutral or negative impact on your credit rating.The following are examples of derogatory narrative codes that will profoundly negative impact on your credit reports and credit scores that are generated from your reports.

• Charge off
• Paid Charge off
• Repossession
• Foreclosure Process Started
• Redeemed Repossession
• Settlement accepted on this account
• Account included in wage earner plan
• Account included in bankruptcy

Public records or collectibles - Public documents as reported by the credit reporting agencies are bankruptcies, judgments and tax liens. Courthouse does not report to credit bureaus in the same way a lender reports. Instead, the credit bureaus hire public records "sellers" to go to the courthouse and collect and verify the information on public record, and report it on your credit report. In the case of public documents, none of them is good for your credit. Any public record that appears on your credit report is considered negative and significant impact on your score.

Collections are not public documents, but they are almost always presented in the same section of the credit report as public records. As such, this paper is now almost always referred to as "public records or information collection." Collections occur when your lenders choose to sell your delinquent accounts to a third party company that specializes in collecting debts from consumers. Collection agencies receive compensation from the lender based on a percentage of the amount they collect from you. Collections, as public documents, will impact your score significantly.

The Impact to Your FICO® Credit Score

The FICO credit score is the credit rating model used in a standard loan today. Each of us has three different FICO scores, one generated from each of your three credit reports. It is important to become familiar with the payment history has been the impact on your credit score.

Thirty-five percent (35%) of the points that make up your FICO credit score is based on your payment history. A full one third of your score depends on this single category. This means that if you have a history of poor payment then it is unlikely thatyour scores are high enough to provide competitive interest rates and optimal conditions when you apply for credit. Conversely, having a solid payment history isan important first step toward earning a solid FICO score. How do you ensureearning the maximum points available on the history of the category of payment?

In this case, it's pretty simple. Your invoices should always be paid on time and reflect a "paid as agreed" status. You can not have any late payments, primarily derogatory narrative codes, public records or collections. This sounds like a lot to keep track of but it's really not difficult. all starts to make your payments on time. If they are on time then the number of possible blemishes will never occur.

Credit Support Online