Credit History

A credit history is a detailed report that describes how well a person has repaid his or her debts in the past. When a person applies for a loan or any other type of credit, they are basically giving the financial institution they are requesting money from permission to review their credit history. The information contained in the credit history will be used by the lender to decide whether or not to approve the loan.

Credit bureaus are in the business of collecting and maintaining credit history information on consumers. This information is then sold to lenders to expedite their decision making process regarding potential borrowers. Once the loan is approved and the borrower accepts the terms, the lender then reports the loan amount or credit limit information back to the credit bureau.

Payment Habits

When the payment cycle begins, the lender keeps the credit bureaus up to date on the borrower's payment habits. The credit bureau is particularly interested in whether or not the payments were made by the deadline. If any of the payments are late, the lender notifies the credit bureau and describes just how late the payments were.

In addition to the payment history, the credit history also contains information on accounts in collections and court records, such as bankruptcies, liens, child support and divorces. Furthermore, all inquiries made regarding a person's creditworthiness is also displayed in the credit report. All this information becomes a part of the consumer's credit history.