Updated: Jan 5
Credit history is one of the most important things for any lender to lend money to someone. Simply put, it is a person's habit or history of paying off the liabilities like bills and loans.
When you apply for a loan, higher purchase, or any credit application, the lender looks at your ability to serve the loan, and if you are a risk or not. This is where your credit history comes into play. If, in the past, you paid your regular installments without any misses or going into arrears and also paid your bills on time, then your credit history would be good and vice versa, if you were careless at meeting your commitments.
Remember, it is important to meet your financial commitments on time. If someone puts up an argument saying that they cleared their debts; however, it was not on time, then they may still end up with credit history hiccups. For example, if someone has a car on finance and the weekly payments as per the finance agreement were $50, and this person missed payments for a few weeks; it would hurt their credit history even if they eventually pay it off.
Does the number of credit checks matter?
Yes, it does up to a certain limit. If a person has had just a few checks in the last 12 months, that does not affect the credit history much; however, if the same person had too many checks in a short interval of time, that can negatively affect the credit history.