What Your Credit History Means

Your credit history is one of your most significant factors of your financial life, because it is similar to a financial report card. You should know that it is an evidence of your borrowings, a proof for your debt pays. Therefore these records, over time, will buildup your credit history.

There are three major companies which track credit history: Experian, TransUnion, and Equifax. These agencies, in fact, take all of your credit transactions and turn it into a single number, referred to as your credit score, marking your financial status.

Getting a credit history can not come over night. You should remember to pay your debts on time and to "not bite off more than you can chew". It will make things worse if you don't pay your arrears in time. Banks and other lending institutes rely on your history of credit to decide whether to lend you money or not. Also, they will make a decision regarding to what kind of interest rate they will charge you with.

But your credit history isn't just used by lenders. You have to take into consideration that, landowners, insurance companies, and even employers also depend on this information, in order to establish a pattern of reliability.The idea is to pay your bills on time, because you are much more reliable than somebody who doesn't do the same. Practically you'll have a much better chance of getting a loan.

Whichever lender, taking into consideration giving a loan to you, can get your history from the credit companies. They basically look at your credit worthiness by looking at your credit score, therefore they're saving time.

The higher your credit score is the more credit worthiness you have, which indicates that you'll make your payments on time. Also, that there will only be a slight risk that you'll fail to pay your loan. As a result the lender will nearly always approve your request and will offer you the lowest available interest rate.

If you have a low score you'll face the opposite. Let me tell you how it works: basically this low score indicates you are not creditworthy. So it means you aren't reliable in paying your bills on time. On the other hand you are seen as a risk for defaulting on your loan. As a result there is a chance that your loan will be denied, or if it is accepted, you can expect to pay drastically higher interest rates.

The new scoring system called VantageScore which uses letter grades like a report card is being slowly implemented by the three main credit agencies, and it will soon become spread, and well known.

Remark:

A score of 901 to 990 would be an A and a score of 501 to 600 would be an F.

There are only ways to perk up your credit score, you cannot change it entirely. Regardless of what your past credit history looks like you can improve it.

Remark :
1.) Once a year you have access to a free copy of your credit report. Check your credit history and try to look for errors. If you find some, you should file a dispute with the credit company.

2.) There are programs on the market that will show you how to improve your credit history, without the services of credit counseling.

Try to have in mind the above written tips and therefore you will succeed to understand and to improve your credit history.