“I Always Pay My Bills on Time! Why Don’t I Have a Perfect Credit Score?”

This article originally appeared in the September 2014 issue of VantageScore Solutions’ monthly newsletter, The Score. Subscribe here.

By John Ulzheimer, Nationally Recognized Credit Expert

It’s a question that comes up often in credit-scoring discussions with consumers – including some consumers who are also financial-industry pros. “I’ve never missed a payment in my life, so I have perfect credit and I should have a perfect credit score, right?”

The question seems logical enough. If you have a perfect track record of making payments on time, it seems safe to assume you’ll have a perfect credit score. What’s critical to understand, however, is that credit scoring models consider more than just your payment history when calculating your credit scores. They consider a wide range of data elements from your credit reports, all of which have proven over time to be reliable predictors of credit risk. Along with your payment history, factors such as your total debt, the age of your credit files, your credit-shopping practices, and your depth of credit all contribute to your credit scores.

When you look solely at the payment history metrics from your credit report, it’s likely that they’re only responsible for around 30 to 40 percent of the points in your credit score.  That means how you pay your bills is important, but not as important as performing well across all scoring categories. In fact, it’s entirely possible to have never missed a payment in your life and still have below average credit scores.

The formula for earning and maintaining a solid credit score is actually quite simple.

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