Credit history explained

What is credit history?

Credit history is a record of your credit and loan repayments. It shows lenders whether you’re a reliable borrower and helps them assess how much of a risk you are.

Your credit history is made up of both positive and negative information. Positive information includes things like on-time repayments, while negative information includes things like late repayments or defaults.

The amount of time this information is held in your credit history file depends on the type of information it is. For example, positive information like regular repayments will stay on your file indefinitely, while negative information like defaults will generally fall off after five or seven years.

You can check your own credit history by ordering a copy of your credit report from a licensed credit reporting body such as Equifax.

How is credit history used?

Credit history is one factor lenders may use when considering a loan or credit card application. A strong credit history can help you get approved for a loan or credit card and may also help you get a better interest rate.

There are a few different ways your credit history can be used:

-To approve or deny a loan or credit card application
-To set the interest rate on a loan or credit card
-To set the credit limit on a credit card
-To decide whether to offer you a promotional interest rate


Related articles: poor credit page, Credit score page.

How is credit history maintained?

There are many ways to maintain a good credit history. One way is to make sure you always make your payments on time. Another way is to make sure you keep your outstanding balances low. Additionally, you can avoid making too many inquiries into your credit report.

What are the benefits of having a good credit history?

There are several benefits of having a good credit history. One benefit is you will have access to more credit products and better terms. Lenders view borrowers with good credit histories as low-risk, so they are more likely to approve them for loans and offer them favorable terms.

Another benefit of having a good credit history is you will probably pay less in interest. This is because lenders will offer lower interest rates to low-risk borrowers. This can save you a significant amount of money over the life of a loan.

Finally, having a good credit history can give you peace of mind. Knowing you are considered a low-risk borrower by lenders can make it easier to sleep at night. It can also make it easier to get approved for other products and services, such as rentals and utility services.

How can I improve my credit history?

It can take years to build a good credit history. But there are a few things you can do to start building your credit today:

1. Check your credit report regularly. You’re entitled to a free copy of your credit report every 12 months from each of the three major credit reporting agencies. Reviewing your report periodically can help you spot errors and identify any potential red flags early on.

2. Make all of your payments on time. Payment history is one of the most important factors in your credit score, so it’s important to pay all of your bills on time, every time. Set up automatic bill pay or reminders so you never miss a due date.

3. Keep balances low on credit cards and other revolving credit accounts. High balances can have a negative impact on your credit score, so it’s important to keep them as low as possible.

4. Apply for and open new credit accounts only as needed. Opening too many new accounts in a short period of time can lower your credit score. So only apply for new credit when you really need it and be sure to shop around for the best rates and terms before you apply.

5. Keep old accounts open and active even if you don’t use them often. Length of credit history is another important factor in your credit score, so it’s good to keep older accounts open even if you don’t use them regularly. Just be sure to pay any annual fees and keep an eye on the account activity to make sure there are no unauthorized charges.

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