The Role Of Credit History In Your Credit Score And How To Build It

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Credit history plays a significant role in determining an individual’s credit score. It accounts for 15% of a FICO credit score. A credit history is a record of an individual’s borrowing and repaying activity over time. This includes credit card balances, loans, mortgages, and other types of credit accounts.

Having a long credit history can positively impact your credit score as it shows that you have a consistent track record of using and repaying credit. On the other hand, having a short credit history, or no credit history at all, can make it difficult for lenders to determine your creditworthiness.

To build a credit history, you can do the following:

Get a credit card: Obtaining a credit card and using it responsibly is one of the easiest ways to establish a credit history.

Apply for a secured credit card: A secured credit card is a type of credit card that is backed by a deposit that you make upfront. It can be a good option for those who have no credit history or poor credit.

Become an authorized user: You can become an authorized user on someone else’s credit card account, which will allow you to build credit history by piggybacking on their account.

Apply for a loan: Applying for a loan, such as a personal loan or a student loan, can also help you establish a credit history.

Keep credit accounts open: Keep your credit accounts open for as long as possible to establish a long credit history

It’s important to note that building a credit history takes time, so it’s important to be patient and consistent with your efforts. Also, it’s important to always pay your bills on time and keep your credit utilization low to have a positive impact on your credit score.

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