How does recent payment history affect credit scoring?

Recent payment history plays a crucial role in credit scoring models. Credit bureaus tend to weigh recent payment behaviors more heavily than those from the distant past. This is because recent actions are seen as more indicative of an individual's current creditworthiness. If someone has made their payments on time recently, it signals to lenders that they are reliable and likely to continue meeting their obligations, positively influencing their credit score.

In contrast, older payment history—while still relevant—carries less weight because it may not accurately reflect someone’s current financial habits or stability. Therefore, greater emphasis is placed on recent activity to ensure that the score is a reliable reflection of an individual's current financial behavior. This approach helps lenders make more informed decisions based on the likelihood of a borrower’s future performance.