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Credit History

The record of how you’ve borrowed and repaid debts.

Your credit history is your financial biography.  It affects many aspects of your life.

Credit bureaus gather information on how you have you have used debt and repaid it.  This is called your credit history.  It includes a variety of financial information about you.  For example, it shows all of your open and closed accounts as well as the start dates for those accounts.  It also shows your credit limits, loan amounts, and outstanding balances.  The credit history keeps record of your payments and payment patterns and reflects any co-borrowers or co-signers on any of your loans.  Finally, a credit history keeps track of any inquiries into your credit scores.

The credit score comes from the credit bureau using your personal information (name, birth date, Social Security number, etc.), credit history, and public record (tax liens, past due child support payments, etc.) to create a credit score for you.  This credit score goes into a credit report.  A surprising number of people and institutions legally have access to your credit report: potential employers, retailers, insurers, landlords, lenders.  This makes it important to have a good credit score.

You can maintain a good credit score by keeping a good credit history.  Pay your debts on time.  Don’t miss a payment, even if that means you can only make the minimum payment each month.  Also, reduce any outstanding debt.  Don’t let credit card debt hang over your head – work to pay it off as soon as possible.  And, don’t open any unnecessary accounts.  Almost every transaction begins at a retailer with the question, “Would you like to save 10 percent today?”  As tempting as it can be to get a quick discount, this can cause long-term damage.  Even if you do not keep a balance on store credit cards, it hurts your credit history.  The inquiry into your credit and the open account lowers your credit score.

Keeping a good credit history grants you great rewards.  Not only does it make it easier for you to secure financing, it also helps you to get better interest rates.  Maintaining a good credit history definitely pays off.  But, if your credit history is not good right now, it is never too late to improve it.  Start creating your good credit history today.