Table of Contents
- What is a FICO score?
- What is a credit history?
- The Importance of Credit History
- How to Build a Credit History
- How soon should you start building a credit history?
Credit has been a part of human history for ages and has been a major influencer in the way people trade goods and stocks. It means that there was no way for creditors to check the credibility of a person. Of course, everyone says they will pay back on time, along with the interest rate. However, not everyone stays true to their words. People should know “How to get a same-day loan”
Moreover, the problem was not only with the credit issuers; Finally, in 1989, the FICO score changed the way people gave or received credit.
What is a FICO score?
A FICO score is an unbiased credit scoring model that allots a to a person based on their past credit history.
A good credit score is a great way for creditors to analyze a person’s credibility. A long credit history make a person more reliable and credible than a person with a high credit score but a short credit history.
What is a credit history?
Credit history is a record of all your past credit transactions and remarks. It contains all your past credits and has every transaction, even the negative ones like late payments or defaults.
In Canada, there are three major credit bureaus that keep track of your credit score: Experian, TransUnion, and Equifax. These credit bureaus keep a file of your credit history that contains every credit transaction in your account and allot you a three-digit number based on your profile’s performance.
How is a credit history made?
- Credit history is the list of all credit transactions you’ve made.
- When you apply for a loan, you open a credit account for yourself linked to your SIN. Although it is not mandatory to link them, by linking them.
- When you apply for a new credit line, the creditor will check your credit score and analyze your credit history. The longer the history and the higher the credit score, the more credible you are.
- By making timely payments, you can make up for that downward shift.
- As a result, your credit score will improve, and your credit history will grow.
The importance of a credit history
- A credit history is a record of all past credit transactions and entries. So, anything with all your past credit status is valuable to future creditors.
- Suppose John is a Canadian citizen, employed, and earns a great living to cover his personal expenses, plus has savings worth $10,000. ne fine day, while John was doing his usual chores, he received a call from his brother saying their mother had lost consciousness and had been admitted to the hospital.
- Upon reaching the hospital, the doctor said she was suffering from a blocked artery in her heart, which had caused half of her to collapse, and to save her life, it was essential to operate on her now, but the cost was $35,000.00. He has $10,000 in his savings, so he needs $25,000.
- So here, a good credit score and credit history make it easy for John to get a loan of $25,000 at a great interest rate and tenure. However, if he didn’t maintain his credit score and good credit history, would it be possible to get a loan easily? No right? A total of $25,000 is no small amount, and no creditor can afford to take the risk of giving this huge loan to a person with poor credit history.
- Believe it or not, in middle-class families, knowing how to get a same-day loan or a short term loan is crucial to the whole family’s security.
How to Build a Credit History
Building a credit history is fairly simple, and you don’t need to be a finance expert to build your credit score. But, of course, the first step towards knowing how to get a same-day loan is to ask a question; unless you ask, how will you know?
But building a credit history is easy. Take a credit card or any other type of loan, start making timely payments, and build your credit history.
It’s that simple. However, the real question is, who will give a person with bad credit score a credit card or any other bad credit loans Canada? Not many would do that. Of course, your income proof may help you secure a credit card, but if you don’t have a job.
Use the card to pay for your daily expenses and pay bills on time. On average, it takes around 18 months to build a credit history.
How soon should you start building a credit history?
- There is no definite age when to start building a credit history. However, logically, you should begin building your credit history as soon as possible.
- It’s not only for your financial future but also for the betterment of your family’s financial future.
Credit history is one of the most important parts of your financial life, so pay attention to it and start building it. As you grow and learn, you will find answers to how to build a good credit history, get the same-day loan, the types of loans, and many other things.