Payment history is
an important factor both in terms of your credit score and as a deciding factor
for lenders and others who check your credit. Lenders may be less likely to
lend to you or may charge you a higher rate based on your payment history.
Even without your knowledge, in most states, auto insurance rates are determined
largely by your credit score.
Poor payment history can also affect your ability to
get a job. Employers usually look at your credit report, rather than your
credit score, when they look at consumer reports (background checks) to
build a picture of you, particularly if you are being considered for financial
or higher-level jobs.
The good news: The impact of this negative lessens over time. The formula goes something like this: One year out, late payments count as 93 percent negative, at two years, 60 percent; three years, 33 percent; and by four years it's down to 22 percent negative.
Source: Rebecca Kuehn, assistant director of the Division of Privacy and Identity Protection at the Federal Trade Commission.
