If you don’t understand what personal credit is, you’re not alone. Your credit history is an important aspect of your life, but most people don’t fully comprehend what it is or what it does. That’s a shame, because you can learn what credit history is in about five minutes, and this information can guide you to a much better personal finance future. So don’t be scared of what you don’t know. Grab this bull by the horns and start taking control of your personal credit, even if for the very first time. This way you’ll know how to raise your credit scores & get the best interest rates in 2017.
Personal Credit History
First of all comes a basic definition. Personal credit history is a record of all of the ways you’ve used borrowed money over the years. You may have borrowed more money than you think. Also, sometimes borrowed items can be represented in the form of money, as with a library book. Let’s say you borrowed a library book in 2005 but didn’t return it till 2007 when you found it under your sofa. It’s likely that the library kept a record of the lost book, and sent the account to collections after they couldn’t recover the book or the fees from you.
This un-returned library book would be recorded on your credit history as a number: the amount of money it would take to buy and process the book again for the library. That single item could bring down your credit score for as long as it remained on your credit history, which happens to be seven years.
The same thing could happen if you forgot to pay your utility bills for a month or two. Or if you charged as much money as possible on your credit cards (making it look like you have to borrow money to afford your life). Or if you requested multiple loans from multiple lenders during a single two month period last year. Each of these could be examples of irresponsible credit behavior.
Improve Your Credit
When you look at your credit history, you don’t have to guess about the items that give you bad personal credit; they’ll all be listed. If you want to improve your credit, you’ll have to get rid of them. You can do this by
- Paying them.
- Disputing the negative items. This causes the credit reporting agency to have to validate the item, which may work to your advantage
- Wait until the item disappears in seven years.
If you want to get better credit, and the benefits that come along with it, then you’ll have to do one or more of the above. Once the items disappear from your credit history, your credit score will go up. You’ll then be able to get cheaper loans. Plus you improve your chances of getting a better job or a more desirable place to live. Make 2017 the year you do these things, and you won’t regret it at all. It’s easier than you might think.