Your credit history is a record of payments of your credit card and loan accounts. Other accounts may also be listed, but primarily your credit history tracks your credit accounts. Each person is responsible for understanding the information that is made available to inquiring companies when they check your credit report. In order to understand your credit history, you must examine your credit reports.
Your credit history determines your credit rating, or “score.” Most lenders use the FICO score to determine the creditworthiness of consumers. A history of paying bills on time, keeping credit cards under the assigned limit and maintaining unused available credit all contribute to a higher FICO score. Accounts that are turned over to collection agencies, judgments and late payments all work to lower the FICO score.
Why Your Credit History is Important
Most people understand that their credit rating is related to their ability to get a credit card or loan. However, your credit standing is important for other reasons, too. Did you know that your credit rating is checked when you apply for a new cell phone service, turn on your utilities or subscribe to cable TV? In many cases, a good credit rating will allow you to start a service with no deposit. You may also qualify for additional perks with a good credit evaluation.
If you have poor credit rating, you will probably be required to place a deposit on your account for new utility
service or cable service. You may not qualify for prime phone plans and service and if you qualify for a credit card or loan, your rates will be considerably higher than someone with a good credit rating.
Moreover, when you apply to lease an apartment, the management company or landlord will check your credit. If your credit history shows negative information, the landlord or leasing company may not rent to you. With a bad credit rating, your insurance rates will be higher, as well. Insurance companies have discovered through various studies that those with poor credit ratings are a higher insurance risk than those with good credit.
How Long is My History Tracked?
Each account remains on your credit history for seven years. If you have maintained a good payment record, then the positive information is available on your credit reports for the duration. Conversely, if you miss payments, fall into default on accounts or if accounts go to collections, this negative information stays on the report for the duration. In some cases, such as bankruptcy filings, the negative information remains on your record for a total of 10 years.
How Can I Check My Credit History?
You can check your credit history by requesting your credit reports from the companies that record your credit behavior. Three independent companies, also known as “credit bureaus,” each keep and maintain a report of your payments and accounts. The three credit bureaus are Equifax, Experian and TransUnion. Each of the three companies may track different accounts, which is why it is important to get your credit history report from all three companies. You can contact each company for a copy of your report. Each company charges a nominal fee for your credit report. However, you are entitled to receive one free report from each of the three bureaus once per year. Visit AnnualCreditReport.com for more information about how to receive your free credit history report. No payment, subscription or credit card is required.