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How Long Does Payment History Impact Your Score?

Senior Contributor

Re: How Long Does Payment History Impact Your Score?

The impact of lates - like many other scoring factors - is scorecard and to some extent profile dependent. Regardless, attempting to offset a late through dilution (opening a bunch of new accounts) is more apt to drop score further as opposed to offset the recent late - IMO. The drop in AAoA, addition of a critical mass of new credit and added inquiries are detrimental. 


I also have read Fico articles which do mention multiple 30 day lates will be more impactful toward score than one or two "isolated" 30 day lates. However, that does not appear to be the case with severe, + 90 day lates. Severe lates are treated more like collections where you have them or you don't - with the main differentiation being age of the derog(s).


Side note: Absolute point drop due to a late may actually be more severe for many top scoring profiles. I suspect my score would drop 70 points due to a single 30 day late - for up to a year and then taper off the 2nd year. In contrast, I would guestimate that a single +90 day late would drop my score at least 120 points - to the 720 to 730 range for a couple years and continue to affect score for a full 7 years. By comparison, someone with a 740 score may experience an 80 point drop due to a new 90 late [assuming the person had no lates or an unrelated, isolated, 30 day late on file prior to the 90 day late]

Fico 9: .......EQ 850 TU 850 EX 850
Fico 8: .......EQ 850 TU 850 EX 850
Fico 4 .....:. EQ 809 TU 823 EX 830 EX Fico 98: 842
Fico 8 BC:. EQ 892 TU 900 EX 900
Fico 8 AU:. EQ 887 TU 897 EX 899
Fico 4 BC:. EQ 826 TU 858, EX Fico 98 BC: 870
Fico 4 AU:. EQ 831 TU 872, EX Fico 98 AU: 861
VS 3.0:...... EQ 835 TU 835 EX 835
CBIS: ........EQ LN Auto 940 EQ LN Home 870 TU Auto 902 TU Home 950
Message 21 of 24
Not applicable

Re: How Long Does Payment History Impact Your Score?

Yep, there's certainly no doubt that opening lots of new accounts as a strategy for handling derogs is misguided.  As Sarge observes, these would not have a long history of ontime payments behind them and (as Sarge and TT also observe) the flurry of new accounts would harm other factors.  So for sure, it's definitely misguided to try to "dilute" derogs by opening lots of new accounts.


Our OP wasn't asking about that strategy, however, unlike a lot of of people who raise this issue.  He was wondering whether already having many other accounts with a long and perfect payment history would soften the impact of one Day 30 date (contrasted with having very few accounts -- possibly only having one account say). 


As far as I can see there's no way to know for sure.  The common answer is No, but the language I found in Learn About Scores seems to suggest Yes.


Regardless I can't see it making much difference in terms of what a person should do.  (I.e. practical decisions)  The clear decision is to set up your accounts so that you can never be late.  And yeah, there are good reasons to develop a thick profile (many accounts) but there are plenty of reasons for doing that without grasping for hypothetical advantages in how it might affect derogs.


As in the classic Bob Newhart sketch, the answer to how you should handle derogs is: Just Stop!

Message 22 of 24
Senior Contributor

Re: How Long Does Payment History Impact Your Score?

Thomas_Thumb and CGID....Yes I agree, my only point was more norrowly tailored at the theory...errant I think...that someone can somehow dilute their baddies with the act of attaining new credit. I do think if you have a lot of credit history, it is possible the fico alogorithm may be more forgiving of an isolated 30 day late, but since the fico bosses will not let us mere mortals in on their secrets it is all conjecture. I do know some people who have applied for new cards thinking it would help their poor credit history and they were sorely disappointed.

TU fico08=824 06/16/24
EX fico08=815 06/16/24
EQ fico09=809 06/16/24
EX fico09=799 06/16/24
EQ fico bankcard08=838 06/16/24
TU Fico Bankcard 08=847 06/16/24
EQ NG1 fico=802 04/17/21
EQ Resilience index score=58 03/09/21
Unknown score from EX=784 used by Cap1 07/10/20
Message 23 of 24
Not applicable

Re: How Long Does Payment History Impact Your Score?

I personally don't think amount of open accounts matters at all with respect to this discussion.  I could be wrong, as obviously I can't magically change my "thick" file into a "thin" one and see what happens, but that's what my gut tells me.  I don't think it matters if someone has 100 open accounts or 1 open account.  If they get a 90 day late, their scores are going to suffer relatively equally.  Again, that's assuming same AAoA, AoOA and all other factors that could impact score and/or influence score card assignment.


I will say this, though.  Upon a manual review by a human being, they'd much rather see 1 severe late payment across 100 accounts (99 clean) than 1 severe late payment with just 1 (or a few) accounts.  If someone has a substantial amount of [positive] accounts and only 1 has a late payment, upon a MR the late payment would much more likely be viewed as a fluke rather than a pattern of behavior.  On a thin file where only a couple of accounts exist, upon a MR it would be impossible to tell whether or not a late payment is a fluke or not based on the limited data.  That said, the person performing the MR would be much more critical of the late payment when considering far less overall data, as it would make up a much more significant portion of said data.

Message 24 of 24
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