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What is Credit History?
Credit history is a report that documents anything related to how an individual managed his or her credit. It includes information on borrowing and repayment of credit cards, bank and car loans, mortgages and any other debt owed to a creditor. An individual's credit history will not only include open accounts, but includes any credit card accounts and loans applied for or closed. It lists late payments, defaults on loans and bankruptcy.
A person's credit score is determined in part by his or her credit history. Things on it that are considered negative include bankruptcy, late payments, high credit card balances and defaulting on a loan or credit card account. These negative marks contribute to a lower credit score.
A good credit history is important for a number of reasons. Credit card companies along with banks and mortgage companies want to provide loans and credit to people who are considered a good risk. This means people who will payback the money. If a person has a poor history with credit, and likely a low credit score, he or she may be considered a high risk and have a difficult time obtaining credit, including loans. If credit is obtained, it may be at a higher interest rate than someone with a good history.
An individual's credit history is recorded on a credit report. There are three major credit reporting companies: Equifax, TransUnion and Experian. Each company obtains its information from the credit card companies and banks. People should keep in mind that certain things, such as a bankruptcy, may not remain on the credit report forever. Consumers should determine the length of time negative marks are allowed to remain on a credit report and contact companies to ensure they were removed.
One step that people can take to improve their credit score is to get a copy of their credit report and review their credit history. Mistakes can be removed from it by writing to the reporting company. Paying bills on time, staying under credit limits and learning from past mistakes are also steps a consumer can take to maintain good credit.
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![A person's ability to pay bills on time will be included in credit history.]()
By: WavebreakMediaMicroA person's ability to pay bills on time will be included in credit history. -
![Information about one's credit history is listed on a credit report, which contains details about account and payment history.]()
By: alexskopjeInformation about one's credit history is listed on a credit report, which contains details about account and payment history. -
![A good credit history may lead to better interest rates on credit cards or lines of credit.]()
By: bradcalkinsA good credit history may lead to better interest rates on credit cards or lines of credit. -
![Credit history is a report documenting how a consumer has handled credit accounts, including paying bills on time.]()
By: neirfyCredit history is a report documenting how a consumer has handled credit accounts, including paying bills on time.
Discussion Comments
Sally20- I just want to add that you may have to obtain a co-signer if you don’t have established credit.
Without a credit history to base on, many companies are reluctant to lend money and usually require a secondary signer on the account. If they do take a chance, the interest rate might be very high.
Crispety- I agree with you, but I want to add that if you have a parent that has good credit and they add you as a secondary account holder, you can also establish your credit history this way too.
This is what a lot of parents do to help their children establish their credit history.
Sally20- I think that if you do not have a credit history than you probably do not have a credit score. The best thing to do is to establish some form of credit by trying to apply for a secured credit card at a credit union.
The way this works is that you supply a few hundred dollars in a bank account that is frozen. The bank will then supply you with a credit card with a credit limit based on the amount you placed in your bank account.
Usually these first credit card limits are really low. A credit limit of $500 is very common, but at least you get to establish your credit little by little.
I am buying a new car next month. i do not have credit. what should i expect my score to be?
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