Credit history

More than ever before, creditrs and other service providers, such as landlords, use your credit history to determine whether to extend you credit and services. Lenders review your credit history not only to decide whether they will offer you credit but also at what rate.

Your credit history affects everything from the size of the loan you qualify for to the interest rates you receive. It stays with you and therefore it's important to actively manage it throughout the year so it can remain in as good a shape as possible.

Bad credit hurts

If your payment history shows you did not make loan payments on time and consistently, future lenders may interpret this information to mean that you are not going to pay a new loan back in a timely manner or that you may not pay it back at all. You may be denied credit all together. Or, you may be charged a higher interest rate, thereby paying more for the loan than if you had better credit.

If you have acquired a lot of debt and are applying for still more credit, a lender may deny your application because they consider you to be over-extended. Based on the lender's evaluation of your income and existing debt, a lender could believe you may not be able to handle the additional financial obligation.

The bottomline is that, your credit report affects whether lenders will loan you money and at what interest rate. Higher interest rates raise your monthly payments, making your overall repayment of loans more expensive. If you are denied credit all together, you may not be capable of purchasing the things you want, when you want them.

Your rights

If you are denied credit, federal law requires creditors to disclose to you why you were refused. If you were not approved because of information in your credit report, the lender must disclose the name, address, and phone number of the credit reporting agency that provided the report.