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What is your credit history?

Your credit history is how banks and other lenders can see how reliable you are at borrowing and repaying money.

No responsible company will lend money to a person with bad credit. That's because it can indicate they are financially irresponsible or struggling to manage their existing debts. So, a good credit history can help you to get approved for credit cards, loans and mortgages, while a bad score can mean your application is more likely to be rejected.

Credit reference agencies compile this information based on your financial history - for example loans or credit cards you have applied for in the past, and how reliably you’ve repaid them.

If you apply to borrow money or open a new credit card, banks will look at your credit history before deciding whether to accept your application. It may also help them decide how much to offer you.

What factors can affect your credit history?

Your credit history is a reflection of how you've managed your debts and bills in the past. If you've borrowed money and always kept up with repayments, this will have a positive impact on your rating. But a history of late payments or failing to repay at all would have a negative impact.

If you've never borrowed money before, it can be more difficult for lenders to assess the risk of lending to you, and your credit rating will also reflect that. For young people, a credit card with a relatively small credit limit is often the first experience you'll have of borrowing money, and keeping on top of the monthly repayments can be a good way to start creating a positive credit history.

Factors that are included in your credit report include:

  • any credit agreements such as loans and credit cards, including any that you hold jointly with other people

  • your history of credit repayment, including any payments you've missed

  • public records, including court judgements and the electoral register

Your credit report does not include things such as your salary or medical history. 

How to improve your credit rating

If you want to start building a strong credit rating or improve your existing credit history, there are a number of things you can do.

Pay your bills on time

From monthly repayments on any existing credit cards or loans to utility bills and your rent, make sure you pay all of your bills on time, every time. Setting up a Direct Debit for regular bills can help you to avoid accidental late payments. 

Clear your existing debts

If you already have a credit card or a loan, you should try to pay it off in full before applying for another. It is possible to hold multiple loans at once, but too many can be a red flag for credit companies, and can also make it more difficult for you to manage your existing debts. 

Check your details

Make sure that all of your existing accounts have up to date details, including your current address.

Build your credit history responsibly

Taking on a small amount of debt, such as a credit card with a relatively small credit limit, can help you to demonstrate you're a responsible borrower - as long as you pay it back on time and in full. 

Stay within your limits

If you do take out a new credit card, try not to spend so much that you reach or exceed your credit limit every month. This can give lenders the impression you're struggling to manage your finances. Ideally, you should aim to stay below 75% of your total credit limit on any one card. If you do need to go over this for any reason, increase your repayments to get back down below the 75% threshold as soon as you can.

Next steps

If you're interested in starting to build a credit history, take a look at our credit cards for use in Bermuda and abroad. Our online comparison tool can help you to see which of our cards might be the right choice for you. 

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