How Payments Affect FICO Scores

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Bill and credit payments have a major effect on FICO scores. Timely and complete payments can account for around 45 percent of an overall credit score. Raise your FICO score by paying bills on time with advice from a registered financial consultant in this free video on personal finance and money management.

Part of the Video Series: Personal Finances & Money Management
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Video Transcript

This is financial adviser Patrick Munro talking about how do payments affect FICO scores. Payments of your credit cards and your obligations, be they car loans, mortgages, and things of that nature -- in other words, your debt obligations -- are very, very key. And it amounts to about 45 percent of the overall score. In other words, the timeliness of your payments. It's very paramount that you make sure that when you have your payments set up in a household budget that you don't mail them on the due date because if you do, you'll trigger a late fee. That late fee, if it remains a problem to the credit card company, will be reported to the credit bureaus, and therefore, will lower your score. So payments affect the FICO score when they're done in a positive way. When they arrive, in fact, before the deadline of the due date, that shows a timely payment, also known in the world of credit reporting as R1, paid as agreed. If you're consistently R1, paid as agreed, you are a good credit risk, but it doesn't end there. There are other benchmarks involved. This is Patrick Munro talking about how do payments affect your FICO score.

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