Credit history – what is it and what does it depend on?


Each bank and some loan companies verify the credit history of a potential customer before any loan decision. However, not every person has such a story – in this situation there are people who have not previously incurred any financial obligations. What is a credit history? What does it depend on and why is it worth building?

A positive credit history is often a pass to receive a loan or credit. Financial institutions dealing with lending money are much more favorable towards people who have already incurred financial obligations and paid them back within the set deadline. This, in turn, means that building your credit history depends on using the loan and credit offer.

What is a credit history?

What is a credit history?

The term credit history often appears in the context of the rules for granting bank loans, and increasingly also loans granted by non-bank institutions. Very often it is confused with the concept of creditworthiness; it should be noted, however, that these are not identical phenomena. Creditworthiness is also taken into account by banks and some non-bank institutions before deciding whether to grant a loan, however, it is determined on the basis of completely different premises – the amount of income achieved, the type of contract concluded by the Customer with the employer or the own contribution declared (especially for a mortgage loan).

Credit history is a record of a person’s activities in the context of financial obligations. Information on these activities is sent to the credit checker (Credit Information Bureau). The main purpose of the creation of credit checker was to control borrowers – thanks to the credit checker database, banks can exchange information on financial obligations incurred by customers. This, in turn, enables them to avoid entering into a contract with a person who has a high risk of defaulting or failing to pay it within the prescribed period.

credit checker receives information such as personal data, data on liabilities incurred (including the amount of the liability, repayment period, currency) and repayment timeliness.

Good credit history – what does it mean and how to build it?

Good credit history - what does it mean and how to build it?

A good credit history is one that demonstrates the timely repayment of obligations by a given person. This makes credibility in the eyes of a bank or other institution the probability of trouble-free meeting the terms of the commitment by a potential customer.

You should start building your credit history with small loans. Small liabilities will be much simpler to pay off, and in this case the risk of default is also minimized. Several such operations, even for a small amount, will make a person perceived by the lending institution as a reliable customer. A good credit history may be necessary at another time in your life – eg when a person decides to apply for a mortgage. The conditions for granting such a loan are much more stringent than in the case of a cash loan or an ordinary loan from a non-bank institution. A good credit history is then essential.

When should you start building your credit history?

When should you start building your credit history?

The answer is simple – as soon as possible. Experts meets these expectations. To be able to get a loan, it is enough to be 18 years old, have a bank account, email account, mobile phone with an active SIM card and pass the creditworthiness test. The data provided by the Customer in the form on the home page and the Customer’s credit history are verified by the company. If the checking process is successful, the customer accepts the contract and then James sends to his account the funds in the previously set amount.