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Credit History |
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Your credit history is just that – a record of your past use of credit. Of primary interest is how well you repay the credit you have been extended. Your credit history is one of the determining factors mortgage lenders and other issuers of credit utilize in making a determination about your creditworthiness.
Your credit history can go back many years and usually will reach back to the first time you were issued credit. The information that makes up your credit history is collected by a credit bureau. In the United States, three major credit bureaus currently exist: Experian, Trans Union and Equifax. The information gathered by these three credit bureaus is organized onto a document called a credit report. The information on your credit report is used to develop your credit score.
In today’s society, one of the smartest financial moves you can make is to build a solid, unblemished credit history. It used to be that your credit history was evaluated only in instances during which you requested an extension of credit such as when you needed a loan for a new or used car, or to purchase a home, or when you applied for a new store credit card.
Nowadays, your credit history is looked at by individuals you wouldn’t necessarily think had a need to know how good or bad you are at repaying your debt. Prospective employers often look at your credit history before making hiring decisions. Insurance companies typically look at your credit history before agreeing to underwrite an insurance policy for you. In addition, your credit history is likely being used to determine the rates you are quoted for your insurance.
If you plan to rent, many property management companies and landlords will first run your credit history before deciding to rent to you. A history of making late payments on your credit cards is going to send up a red flag and may make it difficult to find someone willing to rent to you.
If you’re interested in establishing credit history, a good way to start is by opening a checking and savings account. Then apply for a credit card. Don’t worry if you are approved but with a low credit limit. That actually can be a benefit because it can keep you from overextending yourself which is not a good move when you are trying to build your credit history.
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Credit Card Definitions > A - E > Credit History
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