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Research: Information contained in a credit history report card -

Credit history determines the credit worthiness of a person. When a customer applies for a loan, the financial institute looks into the credit history of the applicant. Credit history is the score that is ascertained to understand the borrower`s repaying capacity. The sooner the debtor clears his credit amount the better is his credit score.

Information mentioned in the credit history of an individual

  1. The kind of credits that you already hold determines the credit score in the credit history of a person. As soon as you apply for a loan or credit, it gets noted down by the credit history agencies. The more the number of credit lines opened in your name, the greater are the chances that you start to loose credibility in the eyes of the lender. This is because the amount of debt against your name also increases. This also gives a bad credit score which is mentioned in your credit history.
  2. The loan period remains mentioned in the credit history report. Loan period is the time that has been fixed by both the lender as well as the borrower to repay back the loan with interest. If a small amount of loan taken has a longer loan period then this attracts a bad credit score and hence gets mentioned in the credit history of the individual.
  3. The timely repayment of credit is also mentioned in the credit history. Monthly instalments are set by the lender for a loan amount that would help the borrower repay it within the stipulated time period. In case a borrower pays more than the fixed amount in every instalment then this attracts a good credit score. On the other hand if a borrower defaults in the payment of the instalments then that too remains mentioned in the credit history.
  4. Any kind of fraud on the part of the borrower is also mentioned. Sometimes the contact address, telephone number as well as job address and other personal information are not honestly mentioned by the borrower. This gives a bad impression as it indicates that the borrower might try to evade the repaying of the loan amount. This too remains mentioned in the credit history.

Importance of credit history

All the above information helps the lenders to further initiate the loan process. The credit history also determines if the borrower should be given some special discounts or not based on his credit score.

A credit history therefore has a huge impact on the financial status of a person. Taking a loan to set up a new business or applying for a loan to buy a house or car requires a good credit history. Now, even prospective employers have a look at the credit history of a person to ascertain the credibility of the person before giving them a job.