Understanding the basics of bad credit history
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Credit Card Applications » Research » Guides » Building Credit History » Understanding the basics of bad credit history

Understanding the basics of bad credit history

Updated: December 26, 2012

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Credit history reflects the financial credibility of an individual. A credit score is what will quantify ones credit history. This score is maintained by one of the three credit bureaus. There are a number of factors that decide the credit score, and thus the credit history of a person. We shall go through a few of the factors that can decide the credit history of a person. The most important thing is the amount of debt that you have. The greater the debt, the lesser your credit score is going to be. Having debt is okay, but it is important to make payments regularly according to the terms and conditions. Failing to make the required minimum payments will negatively affect your credit score. The number of credit accounts you have also determines your credit score. Having many credit accounts is a good thing, but the fact remains that each time you apply for a credit account, your credit score will suffer because the bank sends a request for your credit score to the credit bureaus. If your request is rejected, your credit score will be seriously affected, as this shows that there is some reason for the credit card company not to believe you. Not paying your bills regularly is another factor that can affect your credit history. This can include mobile phone bills, utility bills like water, electricity etc. Post paid mobile phones are linked to your social security number and to your credit reports. Your credit score will be affected adversely if you fail to make a payment. If you do not pay your rent on time, your credit score can suffer. This is only if you shared your social security number with the landlord when you made the agreement. If he files a complaint with rent control and they lodge a report, it will show up on your credit report. Failure to pay back loans like auto loans, education loans or house loans is another important aspect. Even if the loan is secured and the secured item is seized by the bank, you will still suffer, as the bank will lodge a report with the credit bureaus and you will not be able to get loans as easily as you did before this incident occurred. Never leave a loan or credit to collection. If this happens, the bank will have to spend a lot of money to track you down and send loan retrieval agents to seize the property in question. As a result of all this trouble, they will get back at you by filing that report which will say that you are not credit worthy. When you are young, it might seem okay to let go of an automobile if you are unable to repay the loan, but its not just about the money, because credit reports go back seven years into your history.

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