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Credit history is perhaps the single most important factor that is taken into account when one applies for a loan. In the past, Banks and other financial agencies used property and asset papers as a guarantee that a person will repay the loan taken. In fact, the amount of the loan sanctioned by the bank is dependant on the market value of the assets. In addition to this, banks also required a salary statement in order to gauge if the individual would be able to repay the loan taken from the salary earned. But with time, the process of lending has become less complicated. These days, most banks, if not all, will run a background check on a person's credit history.

The credit history will include very single banking, or finance related transaction made by the person. It also includes notes on the whether the person paid back dues in time etc. The credit History has now replaced the role property papers and such like.

Maintaining a good credit History

A credit history is like any other. Once written, it cannot be re-written. Maintaining a good credit History is easy if one takes the effort to make payments on time. Late payments are one of the factors that affect credit history. Most often, negligence or procrastination results in late payments. With just a little bit of care, one can ensure that the interest or payment reaches the bank on the day it has to. A bad credit history is not formed in a day. A couple of late payments and irregularities will not completely turn the credit history around. Similarly, a couple of on time payments can do little to salvage an already bad record. Therefore, one needs to be consistently regular to maintain a good record.

Credit Histories are recorded and stored online to negate the risk of any Manuel mistakes. Recording credit history on a computer makes it simpler to access and to transfer. At the same time, the recording is automatic. There is no room for personal preferences, apologies and the sort to change the entries.

Most people are still discovering the use and expanse of the Credit History. Banks have recently bought into the logic of a nearly faultless method to profile an applicant. The credit Histories are transferred from one bank to another if the need arises.

Credit Worthiness

When a Bank receives a loan application, it runs a background check on the applicant. This is in addition to the details furnished by the applicant itself. Once the bank receives a record of a person's credit History, the bank will gauge the credit worthiness of the applicant. Credit worthiness refers to how worthy or risk proof an applicant is. This is a particularly important aspect when the loan applied for is a large one. This becomes even more crucial when the applicant does not possess any property of value. Then, in such cases, the only documentation a bank has is the credit history of the person, which should furnish enough details.