An individual’s credit history, also called credit report, is the record of a person’s financial transactions in the past. This record contains information on borrowing (loans), repayments, and so on. It covers a lot of details including bankruptcy, late or missed payments, number of credit cards - active and closed, and so on. Basically, the credit history is one’s financial story - down to the nitty gritty.
So why is credit history important? Today, when you apply for a credit card or for a loan, the first thing that the lender will do is check your credit history. Based on what he sees in that report, he can make the decision as to whether or not to grant your application. More than the decision of approval or denial, however, interest rates and other loan repayment terms can also be affected by your credit history.
The credit history actually plays an integral role in calculating one’s credit rating or credit score. While the exact formula for the credit score may not be general knowledge, it is for sure that negative marks in your credit history will pull down that score. Some things that can affect your credit score negatively are high credit card balances, filing for bankruptcy at some point in the past, and late or missed payments.
It is important that individuals monitor their credit history as mistakes can actually be included in it. If you check the contents of the report, you may be able to rectify the mistake and increase your credit score.