credit history
The complete record of how a person has managed credit accounts over time including payment timeliness and balances.
Example
“Seven years of on-time payments built a credit history that qualified him for the best rates.”
Memory Tip
HISTORY — lenders look backward to predict future behaviour. Make the history good.
Why It Matters
Your credit history is one of the most important factors that lenders and creditors use to decide whether to approve you for loans, credit cards, or mortgages. A strong credit history can help you qualify for better interest rates and terms, potentially saving you thousands of dollars over time on major purchases.
Common Misconception
Many people believe that checking their own credit report will hurt their credit score, but this is false. Checking your own credit history is a soft inquiry that does not impact your score, while hard inquiries from lenders do affect it temporarily.
In Practice
Sarah has consistently paid her credit card bills on time for five years and maintains a low balance relative to her credit limit, resulting in an excellent credit history. When she applies for a mortgage, lenders offer her a 6.5 percent interest rate, while her coworker Tom with a poor credit history due to late payments gets approved at 8.2 percent, costing him significantly more over a 30-year loan.
Etymology
From Latin 'credere' meaning to trust plus Greek 'historia' meaning inquiry or record.
Common Misspellings
Check your credit score free — no impact
Related Terms
More in credit
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