What’s the Difference Between Payment History and Credit History?

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Understanding the world of credit can sometimes feel like navigating a complex mission without a clear map. Among the key financial terms you'll come across are "payment history" and "credit history." While they sound similar and both play important roles in credit scoring, each has its own unique function in your financial journey. Let's explore the difference between payment history and credit history, why they both matter, and how they impact your financial decisions.           

What is Payment History?

Your payment history is the foundation of your financial profile. Think of it as a “performance review” reflecting your reliability in meeting financial obligations. Lenders review your payment history first so they can gauge your trustworthiness as a borrower. It includes:

  • On-Time Payments: A log of your payments made on time.
  • Late Payments: Times you missed or delayed payments.
  • Defaults: Instances when your loans or credit card debts weren’t repaid.
  • Collections: Accounts sent to collections due to nonpayment.

Why Does Payment History Matter?

Your payment history has the biggest impact on your credit score, accounting for about 35% of it. Here’s why it matters:

  • Reliable Payments: By consistently paying on time, you show lenders that you are trustworthy, which can positively impact your credit score.
  • Avoiding Penalties: Late or missed payments can result in penalties and negatively impact your credit score.
  • Strengthening Creditworthiness: A strong payment history boosts your creditworthiness, making it easier to qualify for loans and credit cards with perks. That’s because lenders prefer borrowers who are likely to repay their debts.

Since your payment history plays such a major role in your credit score, having a strong one is essential, and it significantly impacts your future financial opportunities.

What is Credit History?

Now, let’s talk about credit history. Think of your credit history as a detailed service record. It’s a comprehensive view of all your financial activities over the years, from credit cards to loans and mortgages. Here are the key components:

  • Accounts Opened: Every financial account you have opened, from credit cards to mortgages.
  • Balances Owed: Your current balance on these accounts.
  • Credit Limits: The maximum amount you can borrow on your credit lines.
  • Length of Credit History: The duration each financial account has been active.

Lenders use your credit history to evaluate your financial behavior. It provides insights into how you manage debt, and it influences your credit score.

Why Does Credit History Matter?

Not only does your credit history make up about 15% of your credit score, but having a strong credit history can unlock many financial opportunities. Here's how:

  • Loan Approvals: Lenders evaluate your credit history when considering loan applications. A positive history boosts your chances of getting approved.
  • Favorable Interest Rates: Good credit history may qualify you for lower interest rates on loans and credit cards. This helps you save money over time.
  • Higher Credit Limits: A strong credit history can lead to higher credit limits, offering greater financial flexibility when you need it most.

Take Control of Your Financial Future

When you understand and manage both your payment and credit history, you are taking important steps for your financial well-being. Remember, our military bank stands ready to assist you every step of the way.

Ready to start building your credit? Explore our special financial products, like the Credit Builder Secured Credit Card at Armed Forces Bank, designed to support you throughout your credit journey. Get started today!


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Subject to credit approval. Transaction and Penalty fees apply.  Credit Builder Savings account required. $5.00 quarterly fee charged to the Credit Builder Savings account if not enrolled in eStatements. Improved credit score is not guaranteed. Credit score is determined by credit reporting agencies based on multiple factors, but satisfactory performance on a credit card product can improve your credit score. Default on a credit card, including missed or late payments can damage your credit score. Once added, funds cannot be withdrawn from the Credit Builder Savings account and the Credit Builder credit card without closing the savings account and the credit card.