You know the difference between your credit score and credit report—but the difference between a credit history and a credit report still might be a head-scratcher for you if you have no credit.
Simply put, your credit history is included on your credit report, and you can’t have one without the other. Here’s how it works.
Credit history
Your credit history is an exhaustive record of all your lines of credit, bill payments and credit usage. If you don’t have any credit cards or loans, chances are you have no credit history. But that’s easy to fix.
There are credit cards for people with no credit; they’re called secured cards, and they report to the three major credit bureaus—Equifax, Transunion and Experian. To establish credit for yourself, consider applying for one. Make your payments on time and use less than 30% of your credit limit. By starting small, you can build a strong credit history over time.
Credit report
Credit reports are the documents potential lenders look at to see if you’re a responsible borrower. They include a person’s credit history as well as other information, like the borrower’s Social Security number and address. You’re entitled to one free credit report per year from each credit bureau.
If you have no credit history or use a credit card that doesn’t report to the credit bureaus, you won’t have a credit report. This doesn’t mean you have bad credit; it just means that lenders don’t have enough information to determine whether or not you’d be a responsible borrower.
If you have a longer credit history, here’s a look at what could be included on your credit report:
Bankruptcies, foreclosures, collections and public records—More than 3 million foreclosure filings were made during the economic downturn of 2008, according to a study by RealtyTrac. But come 2015, those foreclosures, which currently stay on credit reports for seven years along with bankruptcies, public records (such as liens) and payments that went into collections, will come off borrowers’ credit reports.
Inquiries—Hard inquiries stay on your credit report for two years and ding your credit score about five points each. Every credit card application counts as a separate inquiry, so if you have no credit, remember to apply to new cards one at a time.
Late payments—Late payments might not sound like a big deal, but like bankruptcies, they’ll be on your credit report for seven years. Automate your credit card payments to ensure you pay your cards on time, every time.
Closed accounts—If you close an account, it doesn’t just disappear. Accounts paid on time will show up for 10 years from the date of closure, but accounts paid late will show up on your report for seven years after the last missed payment. Before closing an account, think about the impact it will have on your credit report.
Credit history image via Shutterstock.
The post Credit History vs. Credit Report: What’s the Difference? appeared first on NerdWallet Credit Card Blog.
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