Today’s thrilling topic provides insight on how your credit score is calculated through Payment History. This section of your credit score is weighted the heaviest, coming in at 35%. As the subject suggests, it focuses on the history of your payments. It is said that if you have a perfect credit score (an 850) a single 30-day late can lower your score by 175 points. That probably doesn’t seem fair does it? Think about it this way; if you were a bank and you had to choose to lend money between one person who had a single 30-day late last month and who, as a result, now has a credit score of 675 versus a different person who went bankrupt 5 years ago who also has a credit score of 675; who would you choose? Hopefully, you choose the aged, bankrupt client because current risk is much more relevant than any other factor that impacts your credit score. Sure, the client who went late might have had a brain fart and simply forgot to pay a bill or they could now be in serious trouble; that doubt is where the real problem lies. Regardless, getting robbed 175 points on a perfect credit score because you just went late may not seem so bad. The good or bad news is that no one is really losing quite 175 points, because they didn’t have an 850 to begin with. Either way, I suggest not going late.
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