What Is Credit History?

Key takeaways

Your credit history is a record of how you have managed past debt and how you are handling ongoing debt.
Your credit history is outlined in detail in your credit report, which also includes any liens, credit inquiries or bankruptcies.
Credit history also helps to determine your credit score, a numerical value that indicates your creditworthiness to potential lenders.
You can improve your credit history by practicing healthy credit habits, like paying your bills on time, which can also impact your employment and rental options, credit card terms and offers as well as other lending opportunities.

Your credit history is a look at how you have managed your credit in the past. If you are in the market for a new loan (such as a home mortgage loan, a car loan or a credit card), looking for a rental or even searching for a job, your credit history can have a significant impact. Find out more about what a credit history is, why credit history matters and ways you can improve it.

Think of your credit history as a financial record of your credit activity. Among other financial information, it typically includes the following: whether you pay your bills on time, how many credit cards and other loans you have, what types of credit you use and how much debt you carry. Any late payments are typically reported after 30 days delinquent, so you could have late payments that trigger fees with your card issuer, for instance, but are not reported.

Your credit history is recorded in a document called a credit report, which provides information about how you use your credit accounts, including your payment history and account balances. The report also provides your identifying information, details on any collections and bankruptcies on your record and information about credit inquiries. Even child support or alimony payments are part of your credit history and can have a negative impact if you miss a deadline.

Credit history versus credit score

Your credit score and credit history are related but are not the same. Your credit score is based on and calculated using an algorithm that includes your credit history that is documented on your credit report. Three major credit bureaus — Equifax, Experian and TransUnion — generate credit reports, but they do not always record the same information in the same format.

Each bureau uses one or more scoring models — typically FICO or VantageScore — to interpret the data it has collected and create your credit score. FICO and VantageScore have multiple versions; FICO 8 is the most commonly used credit scoring model.

The information on your credit report (your credit history) goes into a mathematical model that generates your credit score, which is typically a number between 300 and 850 that indicates how likely you are to pay off your debt. Because each credit scoring model has its own methods and criteria, your credit score with each one may vary. But each model is attempting to do the same thing: predict your likelihood of repaying your debts, specifically for the financial product you are applying for. So responsible financial behavior is likely to translate to a good score regardless of the model.

Using a report card analogy, your credit report would be the report card that documents your credit history, or how you did on all of your assignments for a semester. Your credit score would be an overall letter grade, such as an A+ or a D.

However, note that you won’t find your credit score on your credit report. To see your actual credit score, rather than the data that goes into it, you can check to see if the credit bureau offers a free credit score and credit report. You might have to provide some personal information, such as your Social Security number. You can also purchase a more detailed report and score directly from one of the major credit bureaus or a third-party service, or you may be able to get a free credit score from a credit card issuer such as American Express or Capital One (sometimes even if you aren’t an account holder with that bank).

Checking your own credit score shouldn’t impact it since it’s considered a soft check.

Why credit history is important

Lenders use your credit history to help determine whether to approve you for a loan or a credit card, as well as the size of your credit limit. Your credit history also influences the interest rate or cost of the loan you would be eligible for.

Even if you’re not in the market for credit right now, some employers check credit reports, and depending on the state it’s common for landlords, utility companies and cell phone providers to check credit scores. Building and maintaining a strong credit score will serve you very well in life.

— Ted Rossman, Bankrate Senior Credit Card Analyst

Say you have a limited or no credit history because you’ve never used credit or you’re a young adult who is just starting out on your own. If you apply for a top-tier rewards credit card to help, you will likely be turned down due to insufficient credit history.

On the other hand, a long credit history full of on-time payments and responsible credit use can help you qualify for the best credit cards or secure a mortgage at a favorable interest rate.

You can get a full picture of your credit history by ordering your credit reports from the three major bureaus. You are entitled to a copy of your credit report for free from each of the three credit bureaus once a week. However, remember that these reports don’t provide your score for free, only the data used to calculate your score. For your credit score, you’ll need to purchase it from them or get it for free from credit card issuers and other services that provide it as a customer benefit.

Reviewing your credit report can help you better understand your financial challenges and areas that need improvement. It’s also good to ensure the information is correct. Sometimes credit reports contain outdated or incorrect information which can wrongly prevent you from receiving access to credit, loans and good interest rates.

How to improve credit history

Here are some best practices to build your credit score and establish a strong credit history:

Pay all of your bills on time, every time. Your payment history, which reflects whether you pay your bills by their due date, accounts for 35 percent of your FICO credit score. Late payments, usually reported when at least 30 days delinquent, will drag your score down. If you do have a late payment recorded on your credit report as part of your credit history but otherwise have a history of paying on time, you can reach out to your creditor and ask to remove it. This may or may not be successful, but it’s worth a try.
Keep your credit card balances low. The amount you owe compared to the total credit available to you accounts for 30 percent of your credit score. The less debt you carry, the better your score is likely to be. Generally speaking, it’s good to use no more than 30 percent of your available credit. Strive to pay your accounts off in full before the end of every billing cycle, if possible. Since your credit utilization is typically calculated once a month, making an extra payment mid-month can help bring it down.
Keep your oldest credit card account open. The length of your credit history — or, how long you’ve been using credit — makes up 15 percent of your credit score. A longer history is better for your score. That’s why, although it may seem wise to close inactive accounts, it’s a good idea to keep them open because they contribute to your length of credit history and bring down your credit utilization. Closed accounts that are in good standing can stay on your credit reports for up to 10 years. For instance, it’s OK to close an inactive credit card account if it’s racking up unnecessary fees, but otherwise consider keeping it open and using it once in a while.
Don’t apply for many credit cards within a short frame of time. New credit accounts for 10 percent of your credit score. This factor considers the number of new credit accounts you’ve recently opened, as well as the number of recent credit applications you’ve made. It’s best to keep these to a minimum. However, when you’re shopping for a big loan such as a mortgage loan or car loan, you do have a “rate-shopping window,” which is a period of time within which multiple credit inquiries will be factored into your credit score just once.
Maintain a diverse portfolio of credit. Your credit mix makes up 10 percent of your credit score and accounts for the different types of credit accounts you have, including revolving debt (like credit cards) and installment debt (like student loans and mortgages).
Consider becoming an authorized user on a parent’s/guardian’s or spouse’s/partner’s credit card. When you’re an authorized user, the primary cardholder’s activity often gets added to your credit report. You don’t have to use the card or even get a physical card to be added to the account, but this is a great way to build credit if you’re starting from scratch … assuming the primary cardholder handles their card responsibly.
Use a third-party tool. You could also turn to alternative credit-building tools such as Experian Boost and eCredable Lift, suggests Ted Rossman, senior Bankrate analyst. These types of services can give you credit for things that haven’t historically counted toward your credit score, including rent payments, streaming service subscriptions and utilities.

The bottom line

Your credit history is an important factor that tells lenders your creditworthiness, or likelihood that you will repay your debt in a timely manner. It’s a record of how well you have managed credit, containing information on your credit accounts (such as payments) and any negative marks against your creditworthiness (such as delinquencies and bankruptcies).

Check your credit report occasionally to make sure that your information is accurate since it informs your credit score. If your credit score isn’t as high as you’d like, engaging in good credit habits can help you to build your credit score.

Frequently asked questions

The credit bureaus can share your credit history as documented in your credit report to creditors, government authorities, landlords, employers, insurance companies, among other services that may need your credit history as outlined by the Consumer Financial Protection Bureau. For some requests, such as for rentals and employment, many states now require consent.
Good credit history is a positive credit report narrative indicating responsible use of your available credit, such as paying your bills on time. Negative input, such as late payments, can stick around on your credit report for up to seven years and cast a cloud on your credit history. One exception is chapter seven bankruptcy, which can linger for as long as 10 years. You can get fraudulent or erroneous information removed from your credit report, but everything else generally stays for a set period of time.