Credit History

Your credit report will contain you past credit history.  A creditor will pull your credit report when you request for credit or apply for a loan.  Your credit report will have your credit history which consists of your past and current credit accounts, your payment history,  the amount of credit limit, public records which includes bankruptcy, foreclosure, deed in lieu of foreclosure, short sale, tax liens, judgments, and personal information about yourself which includes date of birth, social security number, past and current addresses.  Your credit history is somewhat of your total background information.  Your credit history will show your spending habits, your payment patterns, and whether you pay your bills on time or not.  Your credit history is a large part of how the three credit reporting agencies derive to your credit scores.

Impacts Of Negative Credit History

Having a negative credit history can have a big negative impact on your life and can cost you not only higher interest rates on credit, loans, mortgages, and insurance premiums but also it can cost you a job, promotion, or licensure from state and federal SRO (Self regulatory organizations).  Many creditors and employers view those having negative credit history as being financially irresponsible and therefore high risk borrowers as debtors and irresponsible potential employees for employers.  Both creditors and employers understand folks going through bad periods of bad credit due to unemployment, divorce, or medical issues.  For example, if a person has a 10 year credit history but on year 5 started to have late payments, collections, charge offs, judgments, and tax lien and on year 6 had a bankruptcy and foreclosure and bankruptcy but on year 7 through 10 had multiple secured credit cards with low credit balances, a car loan, and several department store loans, this person is a financial responsible person who had a period of a tough times and have recovered.  However, if another person has a 10 year credit history and from year one to year 10 has had histories of late payments, charge offs, collections, medical collections, judgments but no bankruptcy or foreclosure, this person has always had a negative history and would be considered an extremely high risk borrower by creditors and lenders and possibly an irresponsible potential employee from an employer.  One or two late payments will not severely affect your credit history but will hurt your credit scores temporarily.  One or late payments will drop your credit scores but your credit scores will recoup back to the original level in six or more months.

Fixing Negative Credit History

If you had negative credit history, you can correct it and start re-establishing your credit and eventually have positive credit history.  However, you need to discipline yourself and realize the importance of having good credit.  Fixing your credit does not happen overnight and it takes time.  The great news is that having a negative credit history and bad credit is not permanent and you can actually have great credit as soon as a year.  Derogatory credit items will only stay on your credit report for only seven years and it will fall off your credit report.  As time passes, derogatory credit items have little to no impact on your credit scores.  The best way of re-establishing your credit is to add positive credit to your credit report.  Start with getting 3 to 5 secured credit cards with $500 credit limits.  Use them regularly and make sure you religiously pay the minimum payments on time.  Start adding one to three new credit items every year.  After your 3 to 5 secured credit cards has aged at least a year, you can probably qualify for unsecured credit cards.  Add one or two unsecured credit cards every year.  See if you can get an auto loan and department store credit card.  A short term payday loan can also boost your credit scores but you will be paying the price of the enormous interest rates so make sure you pay the payday loan off in less than a year.  You are getting these loans to use it as a credit score booster.  If you follow these steps you will be on the road to good credit.  As years passes, your derogatory credit items will fall off your credit report and your negative credit history will turn into a positive credit history.

The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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