It is incredibly important for you to have a credit history for a number of reasons. Just having a credit history (even if it’s not great) can work in your favour. You should, however make an effort to improve your record and score as much as possible. The more positive items and fewer negative ones that are on your credit history, the better off you will be. This is something that everyone should take into consideration, even young people who are just starting out in the adult world.
What is Your Credit History?
You will first want to know what exactly your credit history is. Even a lot of older adults aren’t clear on exactly what this means. Your credit file is made up of personal information like your full name and date of birth. It also has a complete record of all bankruptcies, missed payments, defaults, and court judgments. All of these things can have a negative impact on your credit score. So your credit history is basically a complete record of all your financial missteps. The longer your credit history is, the more likely you are to get that loan you want. A long credit history with a few negative marks is better than a very short credit history with few negative marks.
Getting a Loan
One of the main reasons that your credit history matters so much is that it can seriously impact your ability to get financing for a new car or house. If you need to get a loan of any kind, it is very likely that the lender will run a credit check. The less negative your credit history is, the more likely you are to get approved. Lenders will also look at your credit score, which is basically a number that represents the overall health of your credit report. Maintaining a good credit history will put you in a favourable position with lenders.
If you want to get a credit card, the company will look at your current credit history before deciding whether or not to issue you one. It will also determine what your interest rate is going to be like. Those who have a good-looking credit history usually get lower rates. While it is possible to get a credit card with bad credit, it can be difficult. You will also most likely have a very low limit to start off. The better your credit gets, the higher your limit will be. Just focus on making your payments on time and keeping your balance clear.
These days a lot of employers take a close look at applicants’ credit history before deciding whether or not to hire them. While this is probably not the only factor they consider, it could be one. This is usually the case with more serious jobs that you get with a college degree. It is, however, still something you should keep in mind.
If you are looking to move into a new flat, your potential landlords will most likely run a credit check to see if you are a reliable person to rent to. Those who don’t have a very solid credit history could have major problems with getting into a decent place. You will probably be able to find a flat to live in, but it might not be a very good one. A good credit score can make all the difference when it comes to getting into a nice place that is safe, clean and matches all of your needs.
How to Improve Your Credit
Now that we have established why your credit matters so much, you will need to start doing everything you can to improve it.
Some of the best ways to raise your credit score include:
- Make payments on time: Always ensure that you pay your bills on time. Whether it is your rent or a credit card, you don’t want to be late on your payments. Each late payment will go on your credit report and work against you.
- Get a credit card: If you are able to acquire a credit card, it can really help you improve your credit. Those who manage to keep making payments on their card before the due date will have a much better-looking credit history.
- Change your spending habits: If you have bad spending habits that have gotten you into trouble in the past, it’s time to start making some changes. Establish a budget for yourself and learn how to live by it.
Always Check Your Credit History
Make sure that you take the time to check your credit history by getting a copy of your credit report from the three major credit bureaus. This way you can spot any errors and track your progress as you try to raise your score.