At a Glance

There are many different factors that affect a person’s credit score, including payment history, credit utilization, length of credit, etc. Some of these factors affect one’s score more significantly than others. Knowing this can help you understand your credit score and take steps to improve it more quickly.

Payment history constitutes approximately 35% of a person’s credit score, highlighting its immense importance. This encompasses an individual’s ability to pay bills on time, including credit cards, loans, and even rent. Late payments, charge-offs, bankruptcies, and other negative marks in this category can have a large negative impact on someone’s credit score.

As a result, to maintain higher credit scores and improve financial opportunities in the long run, it’s critical to make payments across all of your credit accounts on time.

In this article, you’ll learn:



of Americans have missed at least one credit card payment.

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A credit score is a numerical representation of an individual’s creditworthiness. It measures how likely someone is to pay back their debts based on their credit history. The score is calculated using information from a person’s credit report, including the number of open accounts, the types and amount of credit used, payment history, and amounts owed.

Credit scores typically range from 300 to 850, with higher scores indicating better creditworthiness. Lenders, like banks and credit card companies, use credit scores to determine the risk of lending money to an individual and to set interest rates and credit limits.

Related: Credit Score Ranges

Which factor has the biggest impact on your credit score?

In general, payment history is the most significant factor that affects a credit score, making up 35% of the total score. This means that making on-time payments on credit accounts, like credit cards, loans, and mortgages, can significantly improve an individual’s credit score. Late or missed payments, on the other hand, can negatively impact the credit score. Other factors that can impact a credit score include the amount owed, length of credit history, credit mix, and new credit inquiries. However, payment history is typically considered the most critical factor in determining creditworthiness.

What bills affect your payment history?

Your payment history is primarily based on how well you pay your bills that report to the credit bureaus. These bills typically include credit accounts like credit cards, personal loans, student loans, mortgages, and auto loans.

Late or missed payments on any of these accounts can negatively impact your payment history and, as a result, your credit score. It’s essential to pay at least the minimum amount due on time each month for these accounts to maintain a positive payment history.

Some utility companies, like cable or internet service providers, may also report late payments or collections to the credit bureaus. However, many of these companies do not report on-time payments, so paying these bills on time may not positively affect your payment history, but not paying them on time could hurt it.

How long do late payments stay on your credit report?

Late payments can stay on your credit report for up to seven years from the date of the missed payment. The impact of a late payment on your credit score will lessen over time as long as you continue to make on-time payments and do not miss any more payments.

The severity of the late payment can also affect how severely it impacts your credit score. For example, a 30-day late payment will have a less severe impact on your credit score than a 90-day late payment or a default.

Learn more: Late Payments on Your Credit Report

How to improve your credit history?

Improving your credit history takes time and effort, but it’s an essential step in maintaining healthy financial habits. Here are some steps you can take to improve your credit history:

  • Pay bills on time: Payment history is the most critical factor affecting your credit score. Make sure to pay at least the minimum amount due on time each month for all of your credit accounts.
  • Keep balances low: The amount you owe also affects your credit score. Keeping your balances low, or paying them off in full each month, can help improve your credit history.
  • Monitor your credit report: Regularly checking your credit report can help you identify any errors or inaccuracies that may negatively affect your credit history. You can get a free copy of your credit report once a year from each of the three major credit bureaus.
  • Use credit wisely: Using credit responsibly can help improve your credit history. This means not maxing out credit cards and avoiding unnecessary debt.
  • Maintain a good credit mix: Having a variety of types of credit accounts (such as both installment loans and revolving credit) can help improve your credit score.
  • Avoid closing old accounts: If you have an account with a long history, don’t close it. Having older accounts in good standing is beneficial to your credit history.
  • Seek professional help if needed: If you’re struggling to manage your debt or improve your credit history, consider seeking the help of a credit counselor or financial advisor. They can provide guidance on budgeting, debt management, and other financial issues.

Which other factor has a big impact on your score?

Another factor that significantly impacts your credit score is credit utilization, which is the ratio of your outstanding credit card or other revolving credit account balances to your total credit limit. For instance, if you have two credit cards each with a $5000 limit, your total credit limit is $10,000. If you have a balance of $1000 on one of the cards and $2000 on another, your credit utilization is 30% (3000/10,000).

The lower your credit utilization, the better your credit score. High credit utilization indicates that you may be relying too heavily on credit and may have trouble paying off your debts.

To improve your credit utilization and improve your credit score, you can try to keep your credit utilization below 30% of your available credit limit. Additionally, you can pay down your credit card balances or ask for a credit limit increase.

Other factors affecting credit scores

Apart from payment history and credit utilization, there are other factors that will influence your credit score.

1. Length of credit history

The length of your credit history is an important factor in determining your credit score because it provides a longer period of time for lenders to evaluate your creditworthiness. Essentially, the longer your credit history, the more information lenders have to assess your ability to manage credit responsibly.

The length of your credit history makes up approximately 15% of your FICO credit score and is based on factors like the age of your oldest credit account, the average age of your accounts, and how long it has been since you used certain accounts.

2. Credit mix

“Credit mix” demonstrates your ability to manage a variety of different types of credit responsibly. It shows how you manage different types of credit accounts and makes up approximately 10% of your FICO credit score. It’s based on the types of credit accounts you have, like credit cards, mortgages, auto loans, and student loans.

Having a diverse credit mix, including a combination of revolving credit accounts like credit cards and installment accounts like a mortgage or auto loan, can positively impact your credit score because it shows that you have experience managing different types of credit and can handle a variety of financial responsibilities.

3. Credit inquiries

There are two types of credit inquiries: hard inquiries and soft inquiries. Hard inquiries occur when you apply for credit, such as a loan or credit card. Soft inquiries, on the other hand, occur when you check your own credit or when a lender checks your credit as part of a pre-approval process.

Hard inquiries can temporarily negatively impact your credit score because they suggest that you are actively seeking credit, which can be seen as a potential risk to lenders. However, a single hard inquiry’s impact is usually small and typically fades within a few months. Soft inquiries do not affect your credit score at all and are not visible to lenders who review your credit report.

Overall, credit inquiries make up a small part of your credit score – about 10% in the FICO scoring model. While multiple hard inquiries within a short period of time can negatively impact your score, a few inquiries spread out over a longer period are unlikely to significantly impact your creditworthiness.

Related: How is Your Credit Score Calculated?


Lenders look at payment history because it’s a critical indicator of an individual’s creditworthiness. Payment history shows whether an individual has a track record of making payments on time, which indicates that they are likely to continue making payments on time in the future.

Late or missed payments on credit accounts are a sign that an individual may be a higher-risk borrower, as they may have trouble paying off debts in the future. This is why lenders place a significant emphasis on payment history when determining whether to approve a loan application or offer credit to an individual.

Payment history and credit history are related but different concepts. Payment history refers specifically to your history of making payments on accounts, including credit cards, loans, and other lines of credit. On the other hand, credit history refers to your overall creditworthiness and includes a broader range of factors. This includes payment history but also includes other factors, such as the length of credit history, types of credit accounts, and outstanding debt.

Companies that extend credit to consumers, such as credit card companies, mortgage lenders, and auto lenders, typically report payment information to the credit bureaus on a monthly basis. This means that your payment history on credit accounts is typically updated each month and included in your credit report.

If you make your payments on time each month, this will be reflected in your payment history and can help improve your credit score over time. However, if you miss or make late payments, this can also be reported to the credit bureaus and negatively impact your credit score.

Some companies may report payment information less frequently, like every other month or quarterly. Additionally, some companies may not report payment information at all, which means that your payment history may not be reflected in your credit report for that account. It’s always a good idea to review your credit report regularly to ensure that your payment history is being accurately reported.