How Payment History and Outstanding Balances Affect Your Credit History

May 20, 2013

Transunion, Equifax and Experian are the three major credit reporting companies, which provide credit reports that are based on payment history, outstanding balances, length of credit history, types of credit used and new credit. 65% of a person’s individual credit score from these companies is determined by their payment history and outstanding balances. Payment history includes accounts paid as agreed, negative accounts or accounts in collections, how long an account has been past due and the length of time since a person has had a past due payment. Outstanding balances include how much you owe on accounts.

Related: What Affects My Credit Score

This finding also takes into account what kind of account you hold balances on (credit card vs. mortgage, etc.) and how much of your revolving credit line you have used (is your credit card maxed out?) Outstanding balance findings additionally look at the amounts you owe on installment loan accounts in relation to their original balances, checking to see if you pay them down consistently, as well as the number of zero-balance accounts you hold. Knowing the two most important factors that affect your credit score empowers you to make a plan for your finances, and build or maintain a credit score that works for you and your goals.