Following are the major factors that effect the credit
history.

Scores predicts borrower behavior

A few years back, by using credit history, a company Fair Isaac Corporation has developed a scoring
method called the FICO score. This
score is the best way to find out how good
or bad your credit is. For this score, your
report is compared with millions of other credit history by a mathematical
method. Most lenders use this score to predict your behavior in the future towards
repayments.

FICO scores

FICO or Fair Isaac Corporation credit scores
range from a low of 300 to a high of 850. If you have a higher score then it
is a good sign for you. According to a study, by the major credit reporting
bureaus, the average American credit score is 677. FICO suggests that a score
of 720 or higher is required for favorable lending terms which include low interest
rates etc.

The most important factor: your payments

Your payment history puts a great influence on your bad credit history. It
accounts nearly 35% of your score. Payment history includes payment information
on credit cards, mortgages, auto
loans, and other loans. Missing any payment or making late payments badly affect
the payments which in turns puts a negative affect on your credit history and score.

IVAs

Individual voluntary arrangements or IVAs are also affecting credit history. IVAs cause negative affect on the history which disqualifies a person from achieving good deals in loans and mortgage. These arrangements normally extend over a 5 year plan. Being a legal arrangement, the debtor and the creditor are bound to stick to the 5 year plan. In case of failure, the creditor takes action against the debtor tarnishing his credit and degrading his credit history.

Bankruptcy

Incase of bankruptcy, the credit history also gets negative points. The history includes the name of the borrower among the bad cases for nearly a time period of 6 years.

Other factors

The other factors that affect your credit history are, the amount of money you owe, the amount of credit you have, and the proportion of balance to your total credit limit. The length of your history is also important. If a credit history is long and healthy you will be able to deal with any creditor you like. Recent credit activities also play an important role in the credit history such as credit cards, installment loans, consumer finance loans, etc.