Credit History
Definition
Credit History refers to an individual’s documented behavior in handling credit – namely, taking out loans, repaying them, and using revolving credit, such as credit cards. These records are maintained by credit bureaus, private organizations that collect financial data and generate credit reports. Lenders, landlords, employers, and insurers refer to these credit reports to assess an individual’s creditworthiness and predict their ability to manage future debt responsibly.
Examples
- Loan Repayments: An individual’s history of timely (or late) payments of personal loans, auto loans, or student loans.
- Credit Card Usage: Records reflecting how a person uses credit cards, including the balance carried over each month and the timely payment of credit card bills.
- Mortgages: Documentation of a person’s mortgage repayments, whether they consistently pay on time or have had instances of late payments or defaults.
Frequently Asked Questions (FAQs)
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What is a Credit History Report? A credit history report is a detailed record of an individual’s credit activities, including borrowing, repayment, and credit inquiries, compiled by credit bureaus.
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How can I view my Credit History? Individuals can request their credit reports from credit bureaus such as Equifax, Experian, and TransUnion. In some locations, individuals are entitled to a free copy of their credit report annually from each bureau.
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What impacts my Credit History negatively? Late payments, loan defaults, high credit card balances, frequent credit inquiries, and bankruptcy can negatively affect credit history.
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Can errors in my Credit History be corrected? Yes, individuals have the right to dispute and request corrections for any inaccuracies found in their credit reports by contacting the relevant credit bureau.
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How long do negative items stay on my Credit History? Most negative items, such as late payments or defaults, remain on credit history for 7 years, while bankruptcies can stay for up to 10 years.
Related Terms
- Revolving Credit: A type of credit where the borrower can use or withdraw funds up to an approved credit limit. The borrower is only charged interest on the amount used and must make regular payments to cover the borrowed amount.
- Credit Bureau: An organization that collects and collates information regarding an individual’s or business’s credit behavior and produces credit reports for lenders to assess creditworthiness.
- Credit Scoring: A numerical expression, calculated based on a level analysis of a person’s credit files, used to represent the creditworthiness of an individual.
- FICO Score: A type of credit score created by the Fair Isaac Corporation, which lenders use to evaluate the risk of lending money to consumers.
Online References
- Consumer Financial Protection Bureau (CFPB)
- Annual Credit Report (official site to request a free credit report in the U.S.)
- Equifax - Understanding Your Credit Score
- Experian - Credit Score Basics
- TransUnion - Understanding Credit
Suggested Books for Further Studies
- “Your Score: An Insider’s Secrets to Understanding, Controlling, and Protecting Your Credit Score” by Anthony Davenport and Matthew Rudy
- “Credit Repair Kit for Dummies” by Steve Bucci
- “The Total Money Makeover: A Proven Plan for Financial Fitness” by Dave Ramsey
- “The Ultimate Credit Handbook: How to Double Your Score in 30 Days” by Alvaro Angeletti
Fundamentals of Credit History: Financial Acumen Basics Quiz
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