Credit Score VS Credit History
Knowing what information is on a credit report is very important. Consumers with a good credit score and good credit history have a huge advantage over other consumers with a less than perfect credit score and credit history. The credit score and credit history are two very important factors that consumers should know about well before they apply for any form of credit.
What is a Credit Score?
The credit score is the system that the credit agencies use to determine consumers’ creditworthiness. The Fair Isaac credit score is a credit rating system that ranges from 300 to 850. Most lenders view a 720 credit score or higher as the best place for consumers to be on the credit scoring range. Lenders will likely offer these consumers a loan at a very low interest rate. The credit score is usually the first thing that lenders look at when they pull a credit report.
There is no getting around the credit score. Lenders will offer higher interest rates to lenders who have not proven their ability to manage their credit effectively. For example, consumers who apply for a $500 loan may have to pay double-digit interest rates to receive the loan. Consumers can improve their credit score by paying their bills on time and decreasing their debt.
What is Credit History?
The credit history is a blueprint of consumers’ payment history. Lenders report the payment history of consumers to each of the credit reporting agencies. Lenders can quickly determine if any late payments have occurred on open and closed accounts in the past 7 years. Lenders are not too happy about consumers who have late payments appearing on their credit report. Lenders can also quickly determine the length that consumers have had the credit. The lenders view the accounts that have been open for the longest period of time as positive aspects of credit history.
Lenders also want to see a good mix of credit in the credit history. Consumers should have a balance of revolving debt and installment debt for lenders to consider them for a line of credit. It is also very important to remember not to max out the revolving debt because doing so will lower a credit score.
Which Is More Important?
The credit history and credit score are equally important. Lenders want to know that the consumer has a good credit score before considering consumers for a line of credit. After the credit score has been established, lenders look at the credit history to determine if consumers have paid their bills on time and are capable of repaying the credit in which they are applying for at the moment.
Consumers must check to make sure that their credit history and credit score are both positive. They should know what information is on their credit report and make sure that all information is accurate.
Creditors see no difference between credit score and credit history when they make their decision about whether to lend credit. Lenders weigh each of these aspects of credit equally so consumers must make sure that both are in order.