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Where Does My Credit Payment History Come From?

It’s important to know what impact your credit payment history has on your credit score. This history comes from you paying your bills on time, or not paying them on time. The payment history on any credit account you’ve had in the past 7 to 10 years will be showing on your credit report. Remember, these “accounts” do include student loans, mortgages, bank and retail store credit cards and auto loans.

So, if you’re not paying your bills on time, does the credit reports know this? No, of course not, but your lenders know. Your lenders are the ones who are reporting your good or bad payment history to the credit bureaus each month. Usually your credit report will be showing payment history information that is 30-60 days old.

Your payment history comes from these factors:

• Your Current Status on your accounts – this shows how your accounts were rated by your creditors the last time that they reported this info to the credit bureaus. This status is usually marked as some numeric value from 1- 9. Usually any rating besides a “1” is bad. The best status is “Paid As Agreed” and it will carry the numeric value of 1. It means that you are paying on your account like you agreed to with the lender. And likewise, if your account is past due, then it will reflect a number between 2-9

Each number value has this meaning:
1- Account is being paid as agreed
2- Account is 1 to 30 days past due
3 –Account is 31 to 60 days past due
4 –Account is 61-90 days past due
5 –Account has been referred for Collection
6 –Account is unused
7 -Account is being paid through a chapter 13 bankruptcy
8- Repossession
9 -Account has been charged off

* Special note: Each of your lenders has their own special policy that tells them when they will start reporting a payment status that is over the number value of “1”.

• Previous Late Payments – this is a record of any late payments. These missed payments will show up on your report the next time that your lender updates your account with the bureaus. If you miss 2 month’s payment in row, then the lender reports it as 2 missed payments, and so on. Once you make the payment and become “paid as agreed” your lender will show it as paid on time, but mark it as a prior late payment.

• Narrative Codes – a description of what the account is. Some of the most common codes are:

Home equity
Real estate mortgage
Line of Credit
Credit Card
Paid account / zero balance
In addition, there are derogatory codes that will have a negative impact on your report:
Charge off
Paid Charge off
Repossession
Foreclosure Process Started
Redeemed Repossession
Settlement accepted on this account
Account included in bankruptcy

• Public Records- these come from the Courthouses, but not in the same way as they come from lenders. These records will be bankruptcies, judgments and tax liens. The credit bureaus hire someone to go to the courthouse and get public record information and then report it to your credit file.

• Collections- are usually listed in the same section as public records, and they will have a big impact on your score. Collections happen when your lender sells your past due account to a 3rd party company – commonly referred to as Collection Agencies. These agencies are usually getting paid a fee from the lender based on the amount of money they collect from you.

Now that we all understand where our payment history comes from, how can we make sure we are getting the best points from this history? Just always pay your bills, and pay them on time. Don’t let yourself start having any late payments, or collections.

Barbara Partaka

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