The Biggest Factor in Consumer Credit Scoring

That largest percentage of the credit score makeup of a consumer is from their payment history.  Payment history counts for 35% of the total consumer credit score. This means how consumers pay their bills counts for more than one-third of their total score.

 

By law creditors have to wait 30 days to report a consumer late to the credit bureaus. After 30 days they will report the consumer late and their credit scores will go down.  If they pay their bills on time, their scores go up. If they are late their scores will drop, and sometimes the scores can drop significantly.

 

I have seen one late payment on a mortgage account lower a consumer’s mortgage score over 120 points. Late payments can have a massive impact on your client's credit score, which is why it’s so important that consumers never go more than 30 days late when paying their bills.  Having lots of paid-as-agreed accounts consumers can better offset any late payments that might occur.

 

Keep in mind that the 35% of the score that has to do with payment history, is a weights-and-balance of good versus bad payment history. The more good payments the consumer reports has the better their score will be.

 

When paying a bill close to 30 days late, send the payment certified mail so they have confirmation of when the payment was sent.  Creditors like to play games, and this evidence will help in case the creditor reports a negative mark against them, even when they did mail their payment before the 30 days passed.

 

Remember, the biggest factor affecting consumer credit scores is payment history.