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How credit report gets affected by credit history

Posted on: 05th Apr, 2004 03:43 am
Credit history determines your chances of getting a loan through an assessment of your credit worthiness. Lenders need to know how well you can repay a loan and if there is any risk involved in the process.

Lenders generally verify the number and the type of credit accounts of a borrower. They also check out for how long these accounts have been kept opened and whether the borrower has delayed his payments towards any particular loan.
  • The credit history includes information on the type of credit accounts that you have as well as the total amount of credit you have taken in the past.

  • Credit history is basically a record of how an individual has paid back all his debts including secured and unsecured debts in time. It indicates if the debtor has ever filed bankruptcy in the past or if his property has ever been in foreclosure. All these make lenders aware of how well he has managed to repay his past credits.

  • The credit history also specifies whether a debtor has come across any inquiry in the past or if there is any tax lien or monetary judgment imposed on him. Credit history includes information as to whether the consumer's debt is passed on to any collection agency so that the creditor can get back as much part of the debt as possible. The credit history of an individual also speaks about his outstanding loans.
Maintaining a fair credit history is essential. With a good credit history, you can apply for loans in future and easily acquire them at the best interest rate and term. A good credit history assures a lender of your ability of repaying a loan within the specified time and with no late payments. A good credit history reduces the risk of offering you a credit.

Generally, credit history is explained in a credit report prepared by any of the credit reporting agencies, Equifax, Experian and TransUnion. Based on your credit report, the agencies assign a numerical value which reflects your credit worthiness. This numerical value is the credit score and it usually varies from 300 to 900.

A credit score of 680 or above indicates excellent credit and enhances the chances of getting a loan with reasonable payment scheme. On the other hand, a score having value less than 620 implies bad credit history.

Lenders request your credit report from any of these bureaus before approving your loan. Thus, it is necessary that any individual intending to apply for credit in future must maintain a fair credit history.
Related Articles
Credit report and credit history are inter-linked with each other. The credit history determines the credit worthiness of a person. If he has a good credit history, then his credit report is bound to be good which means easy access to loans and any other financial related help. Whereas, if the credit history is not good which might include bankruptcy, foreclosure or any other debt; then it will affect the credit report and ultimately the credit score. Thus, a credit report and credit score is related with the credit history of a person.
Posted on: 30th Nov, 2012 04:24 am
The points stated are very specific as when it comes to loan companies for giving their services to us then the documents filed by that time are more important as compared to the reference of the people. Hence a good credit history is essential for making easy transactions with the loan companies.
Posted on: 30th Nov, 2012 04:39 am
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