Credit cards are luxuries that are offered by financial institutions to their customers. It works on a simple principle where the customer can purchase items of his liking paying for it by means of a credit card. In layman's terms one takes a credit from a financial institution and is liable to pay for it periodically. One's credit history is maintained by the financial institution along with the details of his expenditure at each venue along with time of purchase. Hence ambiguity is avoided. In this way false claims are avoided. If the credit is not cleared periodically a financial charges would be imposed on the amount borrowed.
Credit history is a record of an individuals financial credit .It is a list comprising of all the credits and repayments that an individual has committed in the past. It is an indicator to ones responsibility in way of repaying credits. This information is then forwarded to a credit bureau. This information is then cross checked by the bureau verifying the individuals name and all his specifications. This information is essential to credit agencies who are considering lending a loan to an individual. This is one of the criteria that the credit agency looks into before issuing a credit card. An individual's credit history is a gauge which shows his credit worthiness.
What is bad credit history?
If one fails to pay his credit periodically financial charges and interests accumulate. The failure to pay ones past due bills constitutes a bad credit history. This would be disadvantageous especially if one wants to raise a loan. In certain cases the hoarding of these finance charges would have been unavoidable. In this situation the individual has to try to erase his negative credit history by repaying his past dues which would raise his credit points. This score has to rise to a level where the credit institutions find you credit worthy.
Few tips to recover from a bad credit history
• Despite the amount incurred one can negate his bad credit history by adhering to certain suggestions. One should try to pay all his credits on time. These charges shouldn't be allowed to accumulate. A negative credit rating would be incurred if the payments are 30 days past due.
• You should try to reduce the number of credit cards you own. By reducing this number you could better asses the credit you have raised, this would also help you reduce unwanted expenditure. If you own many cards and want to cancel them you'll have to write a letter to the credit agencies informing them that you want the cards cancelled. You should also inform the credit reposting agencies.
• Try to avoid bankruptcies and tax liens as they stay on your record for a period of 10 and 7 years respectively. Write a letter to your creditors requesting them to reduce your credit limit.
• Invest in a reliable secure credit card that would help you get back on your feet.
• Analyze your annual credit reports and try to look out for any errors.