Positive Credit History

A positive credit history is a credit score or background that shows lenders or creditors a borrower's trustworthiness. A credit report with a positive credit history can result in better opportunities and chances for loans. Positive credit history may also result in better rates on loans. A good credit history shows a borrower is reliable and is a low risk for defaulting on a loan.

History

Credit reporting was introduced in the early 1900s with a group of merchants exchanging customer data. As early as the 1960s, according to the U.S. Federal Reserve, credit bureaus acknowledged that credit reporting was limited by a lack of technology. The 1970s and '80s saw the creation of technology that allowed credit bureaus to more easily exchange information.

Potential

Credit history is looked at by prospective employers. When applying for a job, an applicant might be asked for a Social Security number and permission for the company to do a background check. Background checks often include a credit check. A positive credit history is viewed as a sign of a responsible individual.

Signficance

In the United States, there are three major bureaus that gather information on consumer credit reports--Equifax, Experian and Trans Union. The history of a consumer's credit is determined by the types of credit owned, payment histories, legal judgments such as bankruptcies and outstanding balances. To maintain a positive credit history, avoid judgments, make timely payments and keep balances to a minimum.

Impact

Credit scoring is based on a three-digit number that ranges from 300 to 850. A positive credit history results in a higher score number, which generally conveys a monetarily trustworthy and credible person. Scores of 770 and above are desirable. Scores in the mid-600s and below can be viewed as poor. Consumers with a lower score usually qualify for subprime interest rates, which means they'll be charged more for borrowing, the Federal Reserve notes.

Effects

As credit history has evolved since its inception, credit scores affect different aspects of life from loan agreements to job opportunities to utility rates. Although a consumer with a positive credit history will have little to worry about, negative credit scores affect the rates consumers pay for utilities such as gas and electric. Similarly, though some states have outlawed the use of credit scores as a prerequisite for hiring, others simply mandate that employers first obtain permission.