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By Charlestien Harris

Often I hear people ask, “Why is it so important for me to pay my bills on time?  As long as they get my money they should be satisfied.”  While it is true you have paid your creditor what you owe them, the fact of the matter is there is a due date and your payment is expected by then.

Few people understand the effect late payments can have on their credit score. Thirty-five percent of your credit score is determined by your credit history.  You may ask why that is so important.  How we pay our bills creates a payment history that reflects our personal financial habits. 

Credit scoring is a system creditors use to help determine whether to give you credit.  Information about your accounts and credit use habits, such as bill payment history, the number and type of accounts you have, collections, amount of outstanding debt, and how long your accounts have been active are just some of the categories that are collected from your credit applications and your credit report. 

Credit bureaus use a statistical formula that takes the above-mentioned categories of information and compares it with the information of consumers with similar credit usage profiles.  Once the description of the credit profile is established then the scoring system awards points for each factor that helps predict who is most likely to repay a debt.  The results of the tabulation of those factored points is the credit score.  This score helps the lender to predict how creditworthy you are, that is, how likely it is that you will repay a loan and make the payments when due. 

Your credit report is an important part of most credit scoring systems.  Therefore it is very important that you pay your bills on time.  It is equally important that the information contained on your credit report is current and accurately reflects your true financial history.

*Pro Tip: Download a Credit Report Review Checklist from to help you examine your report and find possible discrepancies that need to be disputed. You can get a free copy of your credit report from

I also get the comment that credit scoring is unfair and does not accurately reflect a person’s character.  Credit scoring is based on real data that is collected from your own credit experiences and statistics, so it usually is more reliable than subjective or judgmental methods.  It treats all applicants objectively because it is based on numbers and statistics, not personal knowledge or relationships.

Under the Equal Credit Opportunity Act, a credit scoring system may not use certain characteristics such as race, sex, marital status, national origin, or religion as factors.  Age and whether an applicant receives public assistance cannot affect credit scoring either.

So, have you paid your bills on time this month? Payment history is a significant factor for your credit score.  It is likely that your score will suffer negatively if you have paid bills late, had an account referred to collections, or declared bankruptcy.

If you have a habit of making late payments, you may want to follow this simple suggestion.  Learn to organize, track and prioritize your bills and expenses.  The more you can prepare for the bills you know are coming, the better you can save for them.  Having a plan and system in place for paying your bills can make them easier to pay on time and help to reduce your stress level. 

For more information on this financial topic, you can contact me at 662-624-5776 or email me at  Until next week, stay financially fit!