When it comes to paying for big-ticket items like cars, houses, computers, and college tuition, few people have enough funds on hand to pay in cash. Most people need financing such as an auto loan, mortgage loan, personal loan, or student loan, which require a solid credit history. Credit plays a major role in our lives and a strong credit history can greatly affect a person's ability to obtain a loan. A good credit history shows the lender the borrower is reliable in paying off their debt.
A credit history is an individual's track record that they have established while managing credit and making payments over time. Lenders will use credit history included on a credit report to evaluate credit risk.
Below are some tips to improve credit history:
• Pay bills on time and stay current
• If you are behind, contact creditors or a credit counselor and establish a manageable payment schedule
• Keep balances low on credit cards and other "revolving credit"
• Pay off debt rather than moving it around
• Avoid applying for or opening new credit cards or closing unused credit accounts
Establishing and maintaining good credit is a real and attainable goal. With proper planning, the benefits of a solid financial foundation will pay dividends for a lifetime.