Payment History: Credit Scores Broken Down – Part 1
How Payment History Affects Your Credit Score
Video Summary & Highlights
Payment history is the single most important factor in your credit score, accounting for 35%.
While making payments on time is crucial, it’s not the only factor that affects your score.
Having few accounts can make your score more susceptible to damage from late payments.
It’s important to understand the reporting window for late payments.
The speaker, Derek Vogel, encourages viewers to manage their payments carefully and promises to cover credit cards in more detail in part two.
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Frequently Asked Questions
Certainly. Unlike personal loans, you won't face any penalties for settling your balance ahead of schedule. However, it's crucial to keep in mind that if your credit card comes with a 0% introductory offer, it's essential to clear your balance completely before the 0% promotion expires and interest charges apply.
However, you can include additional cardholders, each with their own card. While sharing the single credit limit, the primary cardholder remains responsible for settling the debt.
Potentially, yes. Credit card APRs are typically variable, allowing lenders to change rates, impacting your monthly payments. Additionally, be mindful that introductory 0% offers can lead to higher interest rates once they expire. So, it's wise to clear your balance before that happens, if feasible.
Indeed, credit builder cards exist for those with less-than-ideal credit scores. These cards offer lower credit limits (typically £150 to £1,200) and higher interest rates. Responsible use, including full and on-time payments, can gradually boost your creditworthiness, potentially opening doors to better credit card offers down the line.
