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Credit History

What is a Credit History?

A credit history is defined as a record of a consumer's ability to repay debts and demonstrated responsibility in repaying debts.

What is a Credit Bureau?

There are three major credit bureaus in the U.S. - Equifax, Experion, and TransUnion. These agencies collect information about consumers from various creditors, government entities and court systems. The credit bureaus will provide credit reports to lenders, insurance agencies, landlords and other authorized entities upon request.

College students often begin to establish a credit history without realizing it. For instance, when students take out student loans, they have established a legal agreement to repay the loans. The federal government or private lender that loaned the money to the student will begin to report information regarding the loan to the national credit bureaus, thereby establishing a credit history.

What is a Credit Report?

The credit bureaus collect personal information about each consumer. Credit reports include identity information such as social security numbers, current and previous addresses, phone numbers, birth dates, employment and income information, marital status, spouse information if applicable, and more.

In addition, a credit report contains very detailed information about each obligation the consumer has established. The detail will include information about the creditor, such as the original amount of the debt, the monthly payment amount,whether each payment is on time or late, whether the account is still active or has been paid off, if it is still active how much total is owed and how many monthly payments remain.

The credit report provides prospective creditors with information that can help them evaluate the risk involved with lending the consumer money. A person with a poor demonstrated credit history - one that reflects late payments, unpaid debts, bankruptcy proceedings, charge-offs or collection accounts, would be a very high risk and would likely be denied new credit. Most credit information - whether good or bad,remains on an individual's credit report for seven years.

Student Loans and your Credit Report

Knowing that your student borrowing activities can impact your credit is important and here is why!

Your credit report is a record of borrowing and repayment established through many sources such as your personal bank account, any open accounts for debts owed (including student loans and personal loans), revolving lines of credit and limits (credit cards for example), and records of late payments and defaults.

It is important to maintain good credit for a number of reasons. Having a good credit history improves your borrowing potential and can help reduce your monthly payments by way of lower interest rate options when borrowing. Employers also regularly monitor applicant credit history for purposes of security as well as profiling. In some cases poor credit can make a job applicant appear less trustworthy on the job or as someone with poor character.

Your credit report is a measure of your financial risk that lenders and employers use to make decisions about your future so protect it. By borrowing smart and paying on time or paying the debt off early you can use your student loans to help improve your score.

What determines a credit score?

Credit utilization is comprised of several different elements. In addition to keeping your debt as low as possible make sure that you pay on time and monitor your report regularly for potential fraudulent activity. Review of your credit report can also provide you with important reminders regarding credit card accounts that you have opened in your name or student loans that you have previously received that you may have forgotten about.

Check your credit report for FREE each year at (yes it really is free!)

How Does My Credit Report Affect Me?

An individual with an excellent credit history - one that reflects low debt balances and little or no derogatory information such as late payments - is usually offered lower interest rates when borrowing money.

A bad credit report can prevent consumers from borrowing money to purchase vehicles, homes or obtaining credit cards or personal loans. In addition, insurance companies often run credit reports before offering individuals auto or homeowners insurance. Insurance companies may decline to offer you insurance or charge you higher rates if you have a bad credit rating.

Bad credit could also affect your employment or advancement opportunities. Many employers are electing to review credit histories before offering employment or promotional opportunities. Click here to read more about how your credit could affect your employment.

How Do I Establish a Good Credit History?

  • Pay all of your bills on time.
  • Pay debts off as quickly as you can afford to.
  • Pay more than the minimum payment due whenever possible.
  • Don't borrow any more than you need.
  • Don't use all of the credit you are allowed on credit cards.
  • Establish checking and savings accounts. Creditors look at bank accounts as a sign of stability.
  • Try to keep enough money in an emergency savings account to cover at least three months of your expenses.
  • If you do get into a financial bind, contact your creditors immediately and try to make satisfactory alternative arrangements for payment.

How Can I See My Credit Report?

Every consumer is entitled to one free credit report each year. To access your free report, visit

I Already Have Bad Credit, How Do I improve It?

If you have bad credit, it will take time to improve it. Because derogatory entries stay on your report for seven years, you need to take immediate steps to start establishing good credit.

  • If you have open credit accounts, start making your payments on time.
  • If you have accounts that have been charged-off, contact collection agencies or creditors and make arrangements to pay those balances off.
  • Try to establish a small pre-paid credit card account or secured loan such as a vehicle. You may need a credit-worthy cosigner to help you. Make sure you can afford to make the payments on the new credit account and make sure you never have any late payments.
  • Gradually, your good credit entries will overshadow your derogatory entries.
  • You may want to contact a reputable non-profit credit counseling agency. We recommend Greenpath Debt Solutions.