Credit Score Savvy: Improving Your Payment History

Do one thing: Do you have automatic payments set up to pay your monthly bills? No time like the present to make it happen. Need help? Call your credit union or bank or visit a local branch and ask for help setting up these transactions. This one step alone can get you on the road to improving your payment history.

Improve Payment History in a Few Steps

While building and maintaining the three-digit number we call our credit score can seem complicated, there are a few simple steps to take each month to ensure you stay on a path to a solid score and improved financial health. 

The Higher The Better

Keeping tabs on your credit score matters because you can’t improve what you don’t measure. A higher score can unlock lower interest rates on mortgages, auto loans, and other big purchases — savings that add up to thousands of dollars over the life of a loan. Since payment history carries more weight than any other factor in your score, learning how to improve your payment history is one of the fastest ways to move the needle.

How Scores are Used

Your credit score does more than decide loan approvals these days. Landlords often check it before approving an apartment lease, and in most states, insurers use a related credit-based score to help set your car insurance rate. Some employers may review your credit report, not your score, for certain roles, and only with your written permission.

Because a lower score can mean a bigger security deposit or a higher insurance premium, it’s worth building and protecting a strong score every month. Even one late payment can lower your score by dozens of points, which is exactly why a plan to improve your payment history is worth the effort.

Strategies to Improve Payment History

Margaret Poe, head of consumer credit education at TransUnion, offers these strategies for managing the key components of your credit score. 

1. Review Your Credit Reports

Regularly check your credit reports and take notice of the dates. For your credit cards, the account information provided in a TransUnion credit report, Poe says, will list when the account was last updated. 

2. Call Your Lenders

Lenders tend to report your account information at least once a month, Poe says. If you want to know specifically when they do that, you can call your credit card issuer and ask when they report your balances and payment history. 

3. Pay On Time (or early) Every Time 

Because your payment history is one of the other most important factors in your credit score, making payments on time is non-negotiable. It’s the simplest way to improve your payment history.

• Setting up automatic payments for monthly bills can help you stay on top of important due dates. 
• Email or text reminders or alerts can also help. 
• Learn more about how setting up autopay can improve your score.

4. Micropayments to Improve Payment History

You don’t need to wait until your payment due date or when the balance is reported to credit reporting agencies to send money.

• Most credit card issuers allow payments at any time or even multiple times a month.
• If you know that you’re getting close to using more of your credit than is advised at any one time, making an additional payment is recommended.

5. Practice Healthy Habits to Improve Payment History

Understanding the factors that go into your credit score can help you achieve your credit goals, Poe says. “Building healthy credit is a marathon, not a sprint,’ Poe says. “Having patience with the process and with yourself, knowing that it’s normal to make mistakes, can help you establish healthy expectations as you monitor your credit reports.”

With reporting by Casandra Andrews