Credit history

Definition

Your credit history is a record of your financial transactions and issues. This history is recorded by credit reference agencies and allows lenders and finance providers to assess you as a potential customer.

What’s included in your credit history?

Your credit history will have information on every finance agreement you have taken out over the past five years. It will record the total amount borrowed, the interest rate charged, and if there were any issues with repayments. So if you have missed a payment or defaulted on a payment, this will be recorded.

It will also record any other financial issues that you might have had, such as a bankruptcy or a county court judgement (also referred to as a CCJ).

Your credit history will also show how much debt you have, and also the number of times you have applied for credit. If you apply too often in too short a period of time, it may put lenders off approving you, as it’s a sign you might be desperate for credit.

Why is your credit history important?

All finance providers will assess you as a customer based on your credit history. They will analyse all the different aspects of your file and give you a credit score based on their analysis.

If you have a credit history full of missed payments and defaults, then you are going to be deemed as a risky proposition for finance providers. While this may not mean you will be refused any credit at all, it’s likely that the interest rate you will be charged for your package will be a lot higher. 

Another potential issue is not having enough information in your credit history. If you have never taken out a finance package before, then it’s hard for a finance provider to assess you as a potential customer. Having taken out and paid off a finance package is a good way to build your credit history. 

Before you take out any type of finance agreement, it’s a good idea to learn more about your credit history and see if there are any issues that are likely to cause you to pay more for your package than you may like.

How can I check my credit history?

There are numerous credit reference agencies online that can provide you with information on your credit score. Some charge, others are free, so make sure you check the details before you apply to ensure you are getting the information you need from the company.

How can I improve my credit history?

There are numerous ways to build your credit history. As previously mentioned, having taken out finance packages in the past and then paid them off is a good way to show your worth as a potential customer. There are certain 0% credit cards that can be used to help build up your credit history without costing you too much money.

Another way to improve your credit history is to improve your traceability. This means making it easier for companies to see your financial and address history. A good way to do this is to make sure you are on the electoral role.

You can also speak to your Creditplus customer advisor for advice on improving and repairing your credit history.