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Your credit history is a summary of your past payments on things like credit cards, car loans, student loans, or home mortgages. If you’ve ever had a loan of any kind in the United States and that lender provided your payment history to one of three national credit reporting agencies, you have a credit record. Thanks to new legislation, you can receive one free copy of each of your credit report every year. (This will open an external website in a new browser window).
Good credit history The better your credit record is the more likely you are to get a loan at a lower price with good terms. Good credit can help you get utility service or a cell phone without a deposit, get a lower rate on insurance, get a job or an apartment. It’s become more common for landlords, employers, and others look at credit reports before renting an apartment. Not-so-good credit history If you only have an OK credit history, you can still get credit. But it will probably be at a higher interest rate. Most companies now determine the interest rate based on how risky they think you are. This judgment about risk is based on your credit history – the more you have missed payments in the past or defaulted on a loan, the higher your interest rate will be. Poor credit If you have a poor payment history, it is hard to get credit. If you do get credit, it will generally be at higher interest rates or with high fees. This could add hundreds of dollars to a mortgage payment or even to your credit card payments. Secured credit cards (where you deposit a certain amount and then use the card and use that deposit) or “credit builder” loans (where you deposit money into a certificate of deposit and then take out a personal loan against that amount) may be good options for you if you are rebuilding your credit. If you have a poor credit history, see Improving Your Credit Score for more information. No credit Some people do not have a credit history. If you are just out of high school or college or if you are a new immigrant to the US you may not have had the opportunity to borrow money before. If want credit but have never used it before, you may be able to use other kinds of payments to develop a credit rating. For example, lenders may look at regular payments of rent, utility bills, child support and other large expenses to see how you’ve managed your bills in the past. |
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