Credit Record

Think of your credit history as your borrowing "resume" or "track record".

If a stranger came up to you and asked, "Can I borrow $500? I promise I'll pay you back," you probably would be pretty reluctant to lend them money. Yet every day, banks and other creditors face similar situations: People they have never met before borrow money through loans, credit cards, and other forms of credit. Since they don't know most of these people, they must rely on the prospective borrowers' credit histories - the records that show whether they have repaid previous debts on time.

Whenever you apply for a credit card, car loan, mobile phone contract, or mortgage, the credit provider calls a credit reporting agency to check your credit information. If you do not yet have a credit history, the credit reporting agency starts a file for you. That file grows each time you use or apply for any type of credit. This information stays in your credit file for years, and it's one of the things credit providers may look at to decide whether or not to do business with you.

Your past borrowing, spending, and payment habits may determine whether a bank or other credit provider is willing to lend you money and at what interest rate for a car, a house, or other purchase.

Credit providers and credit reporting agencies know your credit history. You should too. It is information that helps shape your financial future.