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A credit history is a record of financial transactions. Every financial transaction: be it loans, deposits, payments, schemes availed etc will feature in the credit history. It is a compilation rather than a statement. Therefore a credit history is one that is formed over the years.

A person can work towards having a good credit history. Financial advisors will tell you that regular payments of interest and a tendency to follow the bank`s rules and regulations can go great lengths to help a credit history. A frequent query is whether a few irregular or late payments can destroy a carefully computed credit history. In almost all cases, a few irregular payments cannot ruin a credit history completely. The credit history is designed to present the complete picture. A few late payments and lapses will not hold up against an otherwise regular and good record. Even though it may seem easy enough to accomplish, maintaining a good credit record is a daunting task. The individual must be committed to the task. The key to staying committed is through the knowledge of how important a good credit history is.

However if one already knows has a bad credit history, experience might already tell you that banks shy away from making any commitment to those with a bad credit history. People with bad credit histories are often denied loans regardless of whether the need is urgent or not. From the bank`s perspective, a bad credit history represents a bad customer, one who will have to be chased for every single payment. The higher the loan amount the lesser the chances that a bank will sanction it to someone with a bad credit history.

In order to take stock of a bad credit history, one must establish the circumstances that caused the bad credit history. Late or irregular payments may occur because the income does not meet the interest demands, or because the income is not steady. Those with free lancing jobs have a harder time paying back loans as there is no steady pay coming in every month end. If this is so, to better a bad record, one must take out loans that one can pay under the circumstances. This will help make regular payments, on time. Even if one has years of bad credit history, a change in trend will be duly noted and appreciated. However, this change will not happen overnight. To make a bad credit history a good one, one must be prepared for the many months it may take to rectify matters.