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For the uninitiated, a credit history is an individual`s previous record of payments made on a certain borrowed amount. Most often, we tend to take our credit histories for granted without giving a thought about its long-term. A bad credit history could turn down the chances of an account holder in obtaining a loan or any other form of borrowed credit. Creditors use credit histories as a reference before deciding to lend to an account holder. One should not assume a high income to be a guarantee for protecting a person having a non-credit history.

In addition to a person`s past payments, lenders also take into account other details like the frequency of payments, method, if any used for debt recovery and also the type of bond between earlier borrowers and the lender. A poor or bad credit history is also determined on the basis of the diversity in the present account and if the lender has made inquiries for a new credit card. The good will of a consumer, among lenders is also misbalanced when he/she scores less on their credit history. Account holders having an impaired credit history make it rather difficult for the creditor to be assured that there is a minimum risk in lending to an individual.

Transparency of payments in earlier debts goes a long way in building an individual`s credibility for future loans and funds. Also account holders must manage their finances efficiently when there is a credit to their name. Having a no credit history is even worst as there are much higher chances of a consumer being rejected a credit. To take care of this, consumers must choose the right credit card at the right time. Its correct usage is further beneficial for consumers to be considered as potential borrowers.

In a worst-case scenario, when users do have a bad credit history, consistently for a longer period or a surged credit card debt, they can consider balance transfer as an option. There are a number of banks and companies, which offer a balance transfer for free and may issue a new credit card. A balance transfer enables a consumer to make the most of the grace period offered by the new company, enabling them to cover up pending dues or mortgages.

Consumers must remember that smart management of a credit card can help develop a good credit history or repair a previously bad one.