What is credit history?
Almost every person who at least once in his life wanted to take out something on credit, be it money to renovate a house or buy a phone, has heard a question about credit history. It usually sounds simple: “What is your credit history?” But what is this story? The answer to this question is quite simple – these are all the loans that you took on yourself and are available now. It also includes all your delinquencies and loan debts (if any).
What is a credit history for?
Credit history serves, first of all, in order to protect banks from the risks of non-payment. It serves as a kind of credit of confidence for banks. Can they give you their funds and get them back after the agreed period. The more loans you have paid on time, the better the story; the more debt, the worse. It’s simple.
How to improve your credit history?
There are different situations in life – some of them are pleasant, and some are not very. Let’s say a person lost his job and could not pay off the loan on time. Over time, he got a new job and was able to pay off the debt, but now the delay remains a stain in his credit history. Because of this, the bank did not approve of the mortgage for him. So how do you improve your credit history? There are two ways:
1) Wait. Over time, the credit history loses its relevance and becomes zero (this only applies to delinquencies, no one will cancel the existing loan).
2) Act. We take the situation into our own hands and correct the mistakes we have made.
The first method is not suitable for many, since there is no time to wait, and money is needed now. Therefore, we will dwell on the second in detail. The only way to improve your credit history is to take out a new loan. At first glance, this may seem like a vicious circle, but do not rush to draw conclusions. Having a bad credit history does not make you an outcast of the banking world, since it is of a recommendatory nature, and you may well get a credit card or microloan. Often, microfinance organizations do not pay attention to the client’s credit history. This rule also applies to credit cards, as the minimum requirements for customers are very low. The main thing in this case is to remember why you are taking out a loan and not to go into a new one.
Proper use of credit is the key to a successful life.