You might have come across the words ‘credit history’, especially when it comes to title loans. Sometimes you need to get a little extra cash, and getting a title loan is a big help. But what is credit history? Why is it so important? We will talk about it in this blog.
What is Credit History?
You can define your credit history as a record of your debt. It includes the history of your credit activity, like whether you pay bills or what kinds of credit you use. Moreover, any debt your carry is also included in your credit history.
Does Credit History Help with Loans?
Your credit history might help lenders decide whether to approve you for a loan or a credit card. Usually, long and good credit history with timely payments helps qualify the candidate for the best credit cards or to secure a mortgage. It might even come with a reasonable interest rate. However, sometimes consumers with a poor credit score might be able to get loans as creditworthy borrowers, depending on the lender’s requirements.
What is a Credit Report?
A credit report is where your credit history is documented. It stores data regarding:
- How you use your credit card accounts, which includes payment history and account balances.
- Credit denials
- Public records and collections
- Your employment
You can get a full copy of your credit report, free of cost, as you’re entitled by law. They’re available at each of the three credit bureaus – Experian, Equifax, and TransUnion. These bureaus gather information from your creditors. Hence, you can get one every year or request one when needed.
It is advised to regularly request a copy of your credit reports and read it. This will help you detect and fix any errors, even stopping fraud before your credit has to suffer.
Factors that Affect Your Credit Score
FICO and VantageScore are the two major credit-scoring models that help determine your credit score. Although they both aim to predict the prospect of you repaying your debts, both will give a different credit score. Therefore, responsible financial behaviors will probably translate the score on both models.
FICO is a model that is used more often. Five factors, from most impactful to least that go into your FICO score are:
- Payment history goes 35 percent
- Amounts owed, or the debt you’re carrying, go 30 percent
- Length of credit history, or the amount of time you’ve been using credit, goes 15 percent
- Credit mix, or the variety of accounts you have, goes 10 percent. These also include revolving debt or installment debt.
- New credit, or the new or recent credit accounts you’ve opened, goes 10 percent.
For both credit-scoring models, the high 600s is when the good credit score begins.
What Is The Takeaway?
In conclusion, credit history is the record of your debt. The credit report is a document that contains your credit history, and you should check it regularly to stay safe from any fraud. Moreover, a good credit score usually increases your chances of getting approved for a debt.
For title loans and buy-outs, dial (281) 410-5337 to contact us at Advantage Finance LLC.