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Getting credit: How Your Credit History Affects You

(continued from Getting Credit: What You Need to Know About Credit)... 


Most creditors use credit scoring to evaluate your credit record. This involves using your credit application and report to get information about you, such as your annual income, outstanding debt, bill-paying history, and the number and types of accounts you have and how long you have had them. Potential lenders use your credit score to help predict whether you are a good risk to repay a loan and make payments on time.

Many people just starting out have no credit history and may find it tough to get a loan or credit card, but establishing a good credit history is not as difficult as it seems.

You might apply for a credit card issued by a local store, because local businesses are more willing to extend credit to someone with no credit history. Once you establish a pattern of making your payments on time, major credit card issuers might be more willing to extend credit to you. You might apply for a secured credit card. Basically, this card requires you to put up the money first and then lets you borrow 50 to 100 percent of your account balance. You might ask other people who have an established credit history to co-sign on an account. By co-signing, the person is agreeing to pay back the loan if you don’t. WHAT A DIFFERENCE A WORD MAKES

Credit card—You can use a credit card to buy things and pay for them over time. But remember, buying with credit is a loan—you have to pay the money back. What’s more, if the credit card company sends you a check, it’s not a gift. It’s a loan you have to pay back. In addition to the cost of what you bought, you will owe a percentage of what you spent (interest) and sometimes an annual fee.

Charge card—If you use a charge card, you must pay your balance in full when you get your regular statement.

Debit card—This card allows you to access the money in your checking or savings account electronically to make purchases.


Good credit is important, now and in the future. In most cases, it takes seven years for accurate, negative information to be deleted from a credit report. Bankruptcy information takes even longer to be deleted—10 years.

Know What Creditors Look for on Credit Reports Understanding what types of information most creditors evaluate is important. Your credit report is a key part of your credit score, but it is not the only factor. You get points for other things like:

Your bill-paying history
How many accounts you have and what kind
Late payments 
Longevity of accounts
The unused portions of lines of credit
Collections actions
Outstanding debt


Credit reporting agencies don’t share files, so you’ll need to contact each reporting agency to make sure the information about you is correct. The three major credit reporting agencies are:




In some states, you don’t have to pay to get a copy of your credit report.

(continue on to Getting Credit: The Fine Print)...

American Consumer Credit Counseling is a non-profit credit counseling and debt management center for individuals and families who want to settle credit card debt and learn to live life debt free. In our free counseling sessions, our certified credit counselors help consumers make a debt reduction plan for eliminating credit card debt over a period of time – usually five years or less. After reviewing a client’s financial situation, counselors work with consumers to find the best path to credit card debt elimination. This may involve providing education about credit card debt and bankruptcy, comparing debt consolidation vs chapter 13 bankruptcy or debt settlement services, and answering basic debt reduction and debt consolidation questions, such as “what is credit counseling?” and “how can I protect my credit score?”

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