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Your
credit history is just that – a record of your
past use of credit. Of primary interest is how
well you repay the credit you have been extended.
Your credit history is one of the determining
factors mortgage lenders and other issuers of
credit utilize in making a determination about
your creditworthiness.
Your credit history can go back many years and
usually will reach back to the first time you were
issued credit. The information that makes up your
credit history is collected by a
credit bureau. In the United States, three
major
credit bureaus currently exist:
Experian, Trans Union and
Equifax. The information gathered by these
three credit bureaus is organized onto a document
called a
credit report. The information on your credit
report is used to develop your
credit score.
In today’s society, one of the smartest financial
moves you can make is to build a solid,
unblemished credit history. It used to be that
your credit history was evaluated only in
instances during which you requested an extension
of credit such as when you needed a loan for a new
or used car, or to purchase a home, or when you
applied for a new store
credit card.
Nowadays, your credit history is looked at by
individuals you wouldn’t necessarily think had a
need to know how good or bad you are at repaying
your debt. Prospective employers often look at
your credit history before making hiring
decisions. Insurance companies typically look at
your credit history before agreeing to underwrite
an insurance policy for you. In addition, your
credit history is likely being used to determine
the rates you are quoted for your insurance.
If you plan to rent, many property management
companies and landlords will first run your credit
history before deciding to rent to you. A history
of making late payments on your
credit cards is going to send up a red flag
and may make it difficult to find someone willing
to rent to you.
If you’re interested in establishing credit
history, a good way to start is by opening a
checking and savings account. Then apply for a
credit card. Don’t worry if you are approved but
with a low
credit limit. That actually can be a benefit
because it can keep you from overextending
yourself which is not a good move when you are
trying to build your credit history.
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