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What is Credit History and Why is it Important?

Wednesday, August 4th

What is Credit History and Why is It Important?

From that first bank account to the latest credit card, an individual's credit history is the complete synopsis of how that consumer has managed their finances over their lifetime. For better or worse, it's all included in one handy document, which can be accessed by financial brokers, credit card companies and even potential employers.

A credit score - a three-digit number that is assigned through a mathematical algorithm which pulls data from a person's credit report - is partially determined by a consumer's credit history. A credit score, in conjunction with a person's credit report, is used to determine credit worthiness. It consists of 15 percent of a consumer's credit score.

Knowing how a credit history can affect everyday living is the best tool a consumer can possess. Landlords, insurance providers and even cell phone companies use a person's credit history to determine if they want to risk doing business with that person. Having a bad credit report - which is the result of not paying bills on time or forfeiting loans and other debt - will have lifelong repercussions for the potential borrower.

It's best to build a solid credit report from day one. The ways to create a positive report include:

  • Pay on time. While this may seem like common sense advice, failure to make payments on time or to make them at all is the number one reason consumers have poor credit reports. In order to pay bills in a timely fashion, set a budget and establish a bill-paying routine so as not to miss any payments. Some online bill payment systems allow users to set automatic payments/deductions for bills that occur on a monthly basis. Using these features may be the best way to make sure bills are paid on time and not forgotten.
  • Pay the balance. It's best to pay the entire amount due each month. However, if that is not possible, at least be sure to pay the indicated "minimum amount due" listed on the bill. Paying even a small amount on bills is better than skipping a payment altogether.
  • Don't overextend available funding. While it may be easier said than done, creating and sticking to a monthly budget is the best way to prevent overspending, which can result in the failure to pay bills on time.
  • Think before buying. Impulse spending is among the quickest ways to overextend available credit. Overextending credit almost always leads to failure to pay bills in full on time, which in turn results in a poor credit report. Establishing a monthly spending plan is the best way to know if there is wiggle room for additional spending on items that are non-essential.

If you're among the estimated 220 million Americans who have bad credit, all is not lost. There are steps to take to help repair credit damage and improve your credit rating. The best way to repair poor credit is to consult with a consumer credit consolidation service, which can help consumers consolidate monthly loans and other debt into more reasonable payments.

The Best Credit Repair Companies Compare Credit Repair Companies Compare Credit Repair Company Reviews What are the best Credit Repair Companies Best Credit Repair Company Reviews

Credit Repair Company FAQ

Credit repair is just like it sounds: a process by which your credit history and score are improved. This happens through negotiations with creditors, removing negative information reported to credit bureaus, and other strategies.
That will depend on several factors: your state of residence, the type(s) of issues you're looking to resolve, and so on. Most credit repair services offer a free consultation, to determine if you're eligible for their help and which approach to take in your specific case.
Credit repair services typically charge a one-time setup fee and monthly service fees. One-time fees range from $19 to $195, and monthly fees from $29 to $159.95. You might get a discount if you sign up as a couple, or if you're a current or former member of the military.
Most of the actions taken on your behalf by a credit repair service can be done on your own. But, how much time do you have? Are you typically available to make calls during business hours? Hiring a credit repair provider can save you a significant amount of time and hassle. And, there's something to be said for letting the experts do the work, using their knowledge and connections to ensure that your credit repair process is done effectively.
The first step with any credit repair service will likely involve a thorough review of your credit report. Your representative will discuss your credit history in detail, help you identify actionable items, and give you a recommendation for which services are best suited to your needs. From there, credit repair providers work diligently to address the issues and resolve them, for as long as you maintain your subscription to their services.
Most services state that you'll see negative items removed from your credit history within the first 90 days. The amount of time it will take to see an improvement in your credit score will depend on your particular circumstances.
Sometimes. A few credit repair services guarantee that you'll see those deletions within the first three months, and you'll get a refund of any fees paid if that doesn't happen. Other providers actually specify a minimum credit score improvement. It's a good idea to know exactly what you'll get from the service you select, before you sign up as a member.
Credit repair is legitimate: working with a reputable service, you can absolutely see big changes in your credit report. On the other hand, there are companies that don't deliver what they promise. Be sure to check out the reputation of any credit repair service you're considering: customer feedback, number of years in business, and the service's BBB rating are all helpful indicators of a provider's trustworthiness.

Compare Credit Repair Companies

Select any 2 Credit Repair Companies to compare them head to head

best-credit-repair-companies
  • Sky Blue Credit
  • Ovation Credit Services
  • Credit Firm
  • Credit Saint
  • MSI Credit Solutions
  • The Credit Pros
  • Lexington Law
  • The Credit People
  • Credit Repair
  • Credit Assistance Network
  • Pyramid Credit Repair
  • E Credit Attorney
  • Credit Repair Consultants
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