Credit History Report

Your credit history report explains your credit score and what you pay for your house or the car and groceries may depend on the three digits that make up this credit score. This score is a number that the banks acquire to assess whether you are eligible for credit or not. They will also determine the rate of interest that they will charge you. Telephone companies and insurance providers also rely on credit scores to decide if you are a worthy credit risk. A landlord or a prospective employer will probably turn you down if your credit score is not adequate.

What makes up your Credit History Report?

It is your credit score that makes you credit worthy. It is the history in your report that tells the lenders how likely you are to pay your bills on time. The Fair Isaac Corporation (FICO) was the pioneer company to make out a model for your credit history. The credit history report is a detailed statement on what kinds of loans you take and how you settle your debts. A three digit number is compiled to evaluate your credit history. The FICO scale has a low of 300 and a high of 850. You are likely to qualify for lower interest rates with a higher credit score. FICO has given its formula to the three major credit bureaus of Experian, TransUnion and Equifax. You can get one free credit report from each of the major bureaus once a year.

Building a Strong Credit History Report

A credit report is very much like a school grade sheet. As poor grades affect your career negatively at a later stage, a poor credit history can also have negative effects on your financial life. There are several steps you have to take in building up a strong credit history report. You have to keep your own savings account and a checking account. You have to set up a credit card in your own name and use it smartly. You have to be careful not to overdraw your account and exceed the limits set for you. The bills have to be paid before the due date. You have to limit the number of your credit cards as too much open credit will affect your credit score negatively. You have to close unused accounts. You have to access your credit report periodically to verify that the information is accurate so that you can find ways to improve your credit.

When is a Credit History Report Created?

A credit report is compiled with a history of how you handle your financial obligations on a consistent basis. It is first generated when you borrow money and apply for credit. The companies that lend money and issue credit cards like banking institutions, credit unions and finance companies will send the information on the financial relationship to the credit bureaus. The credit history report will give details like when you may have opened up your account and whether you make timely payments or miss them. It also keeps a track if you have exceeded your credit limit. The purpose of the credit history report is to ascertain an objective credit rating for you. Lenders will request your credit history report when they want to decide on whether or not you can be given a loan. Your credit history report will help them assess the type of lending risk you may turn out to be and whether you are liable to repay their obligations on a timely basis.