All You Need To Know About Credit HistoryIf you are the kind of person who hasn’t had a credit card until now, you probably wouldn’t know much about credit history, credit score or a credit report. But what is credit history? And why is it so important? Well, think of it as a database that contains all information including the number of credit bills paid on time, the duration for the time your account was kept open and also records derogatory marks such as tax liens and bankruptcies. One might think that there’s nothing to worry about, if he/she doesn’t own a credit card. But do you know that not having a credit history can have a negative impact your financial well-being in the near future. After all, it is your credit score that credit issuing companies or banks go through to that determines your credit worthiness. So, if you haven’t got a credit card yet, now might be the right time to apply for a credit card. However, building a credit history isn’t a herculean task as it sounds. It does take time, but utilising your credit sensibly by paying your credit debts on time and making sure you aren’t leaving any bill unpaid can go a long way. But just because you’ve bought a credit card, don’t expect to have an excellent credit score now. As per the Credit Information Bureau (India) Limited (CIBIL), your credit account must be active for at least a period of six months in order to be given a score. It doesn’t matter how many accounts you own, keeping them unused for a long time will result in a null credit score.Having a good credit score is so vital these days that even the decision on your loan approval depends on your credit score. You might be in need of a personal loan for an emergency or a car loan to buy your dream car. But if the loan lenders can’t find a credit history to begin with or you don’t have a good credit score, how can you expect them to finance you with their loan? Similarly, getting a home loan too requires a good CIBIL score. Not only will it help you get it approved, but also increase chances of being offered low-interest rates. Hence, it is crucial to have a good credit history before applying for any kind of loan. To start with, it is advised to have at least three different credit accounts such as credit cards, coupled with other secured and unsecured loans.The first thing to do is to build trust with your credit issuers. Approach them with a good credit history and they will have no other option but to approve your request. But see to that you don’t miss out on your payments once you’ve received the bills. Failure to pay your credit card bills on time will only show how irresponsible you are, subsequently bringing down your score. If you’re aiming for one of the best credit cards, you might want to keep your credit history spotless. However, credit history, like most of the things, does need a lot of patience and time. It can sometimes take upto a year to build a good credit history.Similarly, ensure that you do not apply for too many credit accounts in a short duration. If you’re found having huge debts in a short span of time, the risk of lending any more credit only increase. Credit management plays an vital role in your financial life. Improving your savings and bringing down your debts not only reduces stress but also gives you a better sense of financial freedom.