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The credit history is fast becoming the most important factor in deciding who gets a loan and who does not. In fact, a credit history is considered important even as a professional character statement. However, financial advisors and those knowledgeable on the subject will tell you that having a credit history is not enough. Most banks will only consider a good credit history.

A bad credit history does more damage to one`s financial reputation than having no credit history. To begin, a bad credit history indicates that the individual`s financial situation is less than flattering and/or the person has shown to interest in making regular timely payments. All these facts firmly secure the individual in the high risk category. Where loans are concerned, the only thing that banks are concerned about is the regularity of the payments.

If a person`s credit history reveals that the person is taking too many loans and not making repayments on time, it is an indication that the person is attempting to roll money between the various creditors, with no actually sizable income to repay any of them substantially. The risk increases with the size of the amount asked for. While many banks may be inclined to overlook a bad credit history for petty loan amounts, no bank will overlook a bad credit history for a large loan sanction. A bad credit is also incriminating because it is tabulated over a long period of time. If a person`s credit score is low, it means that the person in question has been a defaulter for a fair length of time.

A fair credit score is what most people have. It is an average between an excellent credit score on the one hand and a bad credit history on the other. Most people will have the odd periods of irregular, late payments and the occasional defaults. A fair credit score is considered good enough by most banks. However, a person with a fair credit score will not enjoy the same preferential treatment meted out to a person with a good credit score. Therefore, certain schemes and benefits may reach one so easily if the credit score is a fair one versus a good one. It must be mentioned that it is a lot simpler to attain a good credit score if one already has a fair one. The time taken to achieve it is also likely to be lesser compared to the time and effort it will take to repair a bad credit score. In most cases, a fair credit score is sufficient to get loans and other requests from banks sanctioned.