How To Build A Good Credit History

In today’s world, it is extremely important to build credit history that is a positive reflection of your financial habits. While many of us consider that our financial life is only one small part of our life, credit history is becoming a larger and larger influence.

Use of Credit History

Credit history is used for more than just how financial institutions decide whether or not to grant credit in the form of a credit card or home or auto loan to a potential borrower. In many cases, credit history is also used by financial companies to decide on the interest rate they will charge and what lending limits will be placed on the borrower as a result of their credit history and credit score.

Another way in which credit history is used is with insurance companies. In many cases life and auto insurance companies run credit checks to find out about the credit history of people applying for a policy with their company. If the credit history shows a poor history of payments or other negative information, then if a policy is offered, it is usually with much higher premiums than would be charged to someone with a good credit history.

More and more, employers are also looking at credit scores when they screen potential employees. In the past, this had only been a regular tactic for employers hiring for financial positions in banks or other industries where the handling of money was important. However, today, employers are less and less willing to extend an employment offer to individuals with poor credit history. They consider these individuals to be poor employment candidates because they consider them to be individuals with poor decision making skills, among other things.

Building Good Credit History

Since it is so important to build good credit history because it has such a strong influence over so many areas of our lives, there are a number of steps that should be taken to improve your credit score.

Step 1

Order a copy of your credit report. You are entitled to one free report every year from each of the three credit reporting agencies – Experian, TransUnion and Equifax. You can order a 3-in-1 report, although many of the agencies that offer this type of report charge for their service. You can order your credit reports directly from the credit agencies.

Step 2

Review your report and challenge any invalid or erroneous information by writing directly to the credit reporting agency. Corrections should be made within 30 days after an investigation is made. You may need to challenge errors several times, so be persistent.

Step 3

Take pro-active steps for your own positive credit by reporting good credit accounts to the credit reporting agencies. Write a letter with the relevant information and provide supporting documentation – copies of statements, checks, etc.

Step 4

Take positive steps to pay your existing credit obligations in a timely manner.


If you are pro-active about taking control of your credit, then you can take steps to create and build good credit. By making sure to pay your bills and credit obligations in a timely manner and monitoring your credit report for errors, you can take control of your own credit.

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