Credit gives the word to pay either by repaying it or returning those resources later. In other words, this credit is the method of making the reciprocity formal, legally enforceable, and of course, extensible to a vast group of people who are not related.
However, the resources provided may be financial or have goods or services, like consumer credit. The credit covers any form of deferred payment. Credit generally gets extended by the creditor, the debtor or lender, and sometimes the borrower.
Credit history is quite a foreign concept for people who do not understand the ways of a financial institution, and often end up confusing it with credit score, which is used to calculate it. However, for those who are still confused about what credit history signifies, here is how you can define it.
The credit history of a particular individual includes their financial activity. This can include a myriad of things like their repayment abilities, past financial loans, opened accounts, or any debts that they are yet to pay back. All of this can be summed up into the credit score of a person, which further signifies their creditworthiness. Based on the credit score, which is the creditworthiness of an individual, they will be accepted for further loans.
Knowing an individual’s credit history can be useful for a number of reasons. Here mentioned are some of the more important uses:
1. Knowing the credit history can also tell you a lot about the repayment capabilities of the particular individual. Since the credit history shows details of all prior loans and their repayment, timely payment can help in increasing your credit score, which means you have a good credit history.
2. If an individual does not have a good credit history, it is most likely because they have either defaulted, or do not pay back the money in time. In such a case, lending them money can be a wrong move and risky.
