The Essence of Credit History
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Credit Card Applications » Research » Guides » Building Credit History » The Essence of Credit History

The Essence of Credit History


Updated: December 26, 2012

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One thing that determines whether you are in a sound financial position is your credit history. Every financial activity is recorded and has a specific score to it. Your credit history is essentially the collection of all your financial activities and the total score of all your transactions. If you pay your bills in full every month, that will add a positive score to your credit history. If you miss out on payments or have outstanding balance, that will add negative points to your credit score and your credit history will turn bad.

It is important to have good credit history because it is an important document that is asked for, in most places of business. If you want to buy an automobile, your credit history is checked; if you want to apply for home loans, your credit history is taken as a reference for your credibility; if you want to apply for any form of loan at all, then having good credit history is a prerequisite.

Credit history is easy to maintain if you practice healthy financial habits. Paying your bills on time, planning in advance about how much you need to spend, using your credit responsibly are some of the most important things you need to do, in order to maintain your credit scores. Understanding the way your credit limit works is very important to make use of credit, better. Every individual will be pre-approved for a credit limit, which is determined by the credit card issuing companies or banks. At any given time, you must not have outstanding balance of more than 33% of your available credit limit. This is very important if you want to avoid negative scores hitting your credit report.

Timely payment of monthly installments of all your loans plays an equally important role in maintaining your credit history. Any missed payments will be reported to the credit bureau and will reflect upon your credit scores. Credit bureaus are companies that keep a tab on credit scores of individuals and provide copies of individual`s credit history, whenever requested. You are entitled to receive a copy of your credit report once every year, at the beginning of the financial year. A thorough reading of your credit report will give you all the details of what is causing your score s to go low, and gives a better chance to correct your scores. Building upon a healthy credit history is very important, if you want to survive the challenges the current financial situation throws your way.

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