Everything You Need to Know About Credit History

Find out what you need to know about credit history, which is very important for getting credit, raising a credit card limit, and more.

When you apply for a credit or credit card, if you want to increase your credit card limit or decide to open a deposit account with credit, the first thing to be considered by banks will be your credit history.

Credit history is kind of a summary of your financial life. This is precisely why the credit history is very important for the use of credit products (such as general purpose loans, credit deposit accounts, credit cards) that you make today and that you will make in the future.

What is Credit History?
Credit history is a record of how a person has managed their loans in the past, including their use of credit products, total debt burden, credit limit, and payment schedules.

Banks always look at a potential customer’s credit history and decide whether to approve a credit application or credit card limit increase request.

Although not very common in most of the developed countries in Turkey, employers and landlords may also want to look at your credit history to assess job candidates or potential tenants.

The credit history includes all active credit products regardless of the opening date and all credit product information and details that have been closed in the last 5 years. On the other hand, credit products that are not legally monitored but whose balance is not already covered are included in the credit history even if they are older than 5 years.

How does credit history occur?
A credit history provides a detailed overview of the credit products you are using. The Credit Bureau regularly monitors your credit history and prepares detailed credit reports covering your credit history at your request or for other organizations, such as credit product applications or banks that need to review your requests.

Your credit history includes many details, such as current debt, credit limits, and the variety of credit products used, as well as negative actions taken by banks and financial institutions against you, such as legal proceedings, court orders or foreclosures.

In addition, this information in your credit history is also used to calculate your credit rating. As you probably already know or can predict, a high credit rating indicates better credibility, ie eligibility for lending.

If you have never used credit products before, you probably won’t have a credit history and your credit rating will not be calculated. If you start to use credit products, you will have a credit history and your credit score will be calculated.

Why is Credit History Important?
Good credit history makes it easy for you to get credit, buy a credit card, or simply increase your credit card limit. A bad credit history can also prevent you from getting credit or significantly reduce your other similar options.

If you have a history of overdue payments, or if you have been legally pursued, or have fallen into administrative / statutory pursuit, you may have many problems, from obtaining credit to raising your credit card limit.

Most negative information appears in your credit history for five years. From this perspective, we may say that a bad credit history may require a long time to fully correct. This clearly shows how important it is to pay attention to your credit history.

How to Fix a Bad Credit History
Your credit rating is a reflection of your credit history. By setting useful goals, such as upgrading your credit rating, you can make your credit history the right way to go.

Although you will not be able to remove negative information from your credit history for 5 years, you can take steps to improve your credit history for the coming years.

Here are some tips for fixing a bad credit history:

Pay your debts in delay and close any outstanding balances.
Pay your debts on time.
Have a few active and positive accounts to continue to improve your credit history.
Reduce your limit usage rate from 10% to 30%.
Finally, remember that any bad financial transaction has the potential to damage your credit history. Use your credit products responsibly and keep track of your credit history regularly throughout the year.