Building Credit: The Impacts of Credit History

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Credit history is a record that holds the past circumstances and behaviors of the borrower. Lenders use this data to determine whether the borrower is trustworthy or if he or she is capable of returning the money.

Individuals with a history of on-time payments are considered as reliable borrowers and are likely to pay the loans back on time. On the other hand, people with a contrasting credit history are seen as risky clients because they may not be able to repay the borrowed money reliably.

Based on the credit history, lending companies will decide on whether they’ll agree on doing business with the client and on what terms are appropriate.

However, these institutions aren’t the only ones that use credit reports to predict the risk levels of the borrowers. Below are several more ways that credit history impacts individuals.

Getting a credit card

People who have no records of credit might experience having trouble when qualifying for a credit card; however, they can still find a few reliable Credit cards to build credit appropriate for their situation.

Under other conditions, those who have credit history can conveniently apply for credit cards and have terms depending on their records.

If a person has a bad credit history, then he or she would more likely to have inconvenient terms like low credit limits, no rewards, and high-interest rates. Otherwise, if the person has a good history, then he or she can apply for cards that offer the best terms and rewards.

Renting an apartment

Similarly to any other situations, people who have no or bad credit history will have a hard time looking for an apartment. If the person has records of late payments, the possibility of him or her not being able to rent a room is greater than those who have none.

However, the landowners who have decided to let these people avail their services may ask for additional requirements like a higher security deposit, a cosigner, several months of advance rent payments, and some other related terms.

Getting a loan

Good credit history is one of the primary things lenders and banks seek to see in a borrower. These records are the basis of the interest rates implemented by these institutions.

Although this may not be the same with the interest on credit cards, the interest for loans, especially the installment loans, adds-up quickly through time. Thus, people with a bad history will more likely have higher interest rates resulting in a higher cost of monthly mortgages.


For some countries, employers are legally allowed to ask for the credit records of the applicants. Although this data is never really considered a requirement for employment, this will be used as a basis of how reliable the person is.

Thus, it is very important for people to always be mindful of their credit to avoid experiencing unfortunate circumstances. Also, for those who still don’t have credit cards to build credit can use receipts from their electric and water bills to show their payment history.

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1 thought on “Building Credit: The Impacts of Credit History”

  • Agree that credit history is so important so we got our daughters onto our cards early to teach them how they work, and then upon college graduation our oldest got her own card, then a second to have variety. Having a mix of loans is also good — home, car, credit card. That will come later for our oldest, as she doesn’t have student loans and is still living at home. I have also advised her to check her credit every 4 months — switching among Trans Union, Equifax and Experian so you can see what data each has on you. They’re giving free credit reports thru April 2021 due to Covid so no excuse not to check!

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