The content is accurate at the time of publication and is subject to change.
Having no credit history is better than having a bad one. The unfortunate part about Credit history is that they can rarely be rewritten. What has occurred is bound to be recorded and will remain unchanged. A credit history is the most important baking statement in recent times. It is the only valued record of a person past financial transactions. The idea itself, originating to provide a quicker - more comprehensive background check on a customer.
Credit histories are reviewed by banks and other financial organizations to determine the character of the customer. A credit history comprising of details of every single financial transactions bring to light various details about the customer - whether he or she is likely to make payments on time, whether income can manage loan payments, how much debt has been incurred over the past, how long the relation with one single financial organization has lasted, etc. The credit histories also indicate if a person is prone to keep changing banks. If he or she does, the reasons may be obvious.
Financial analysts in banks and other similar organizations are trained to read between the details of a credit history. For one, they can accurate determine more often than not, how credit worthy a customer is. This aspect of credit worthiness is most crucial during loan sanctions. In fact, the banks primary interest in an individual's credit History is to check credit worthiness.
Credit worthiness is an interesting term. The term suggests that a customer can be credit worthy or not. Credit worthiness is determined by a person's credit History. For a person to be considered credit worthy, ones credit history must show timely payments and a general regularity of character. When a bank receives a loan application - education, home, vehicle, medical etc, the bank does a background check on the applicant. One need not apply for a loan at the same bank where one has an account. Most often people apply for loans wherever they can find a good loan scheme, this means that for the bank, the customer is a new one. Therefore reviewing a credit history will determine whether or not it is safe to sanction a loan to the customer.
There are countless occasions when a bank has refused a loan sanction to an applicant based on a bad credit history - Particularly loans of big sums. A bad credit history is created when a person does not bother to make timely payments and is generally un-mindful of the bank's polices. A few late payments will not serve to completely destroy a credit history. Bad credit histories are created over time, which is why they are so implicative and taken so seriously.
A bad credit history may prevent a person from finding a loan, even if his or her needs are urgent. With the current financial situation, and the scale of unemployment banks are even more close fisted when it come to bad credit histories. To avoid an irrevocable situation in the future, it makes sense to begin making a conscious effort to maintain a clean credit history.
