What is Credit History and Why It Matters?
26 May, 2025
Synopsis
A credit history is a detailed record of your borrowing and repayment activities.
Timely payments and responsible credit use can improve your credit history.
Factors like credit utilisation and repayment history can impact your credit score.
When you use a Credit Card or take out a loan, you create a record of your financial behaviour. This record is known as credit history. Credit history is a detailed record of your past borrowing and repayment activities. Lenders and banks typically look at your credit history to assess your reliability and ability to manage debt. This makes it important to be informed about your credit history. Therefore, in this blog, we have explained ‘what is credit history’ and provided tips to help you create a positive credit profile.
What Is Credit History?
Credit history is a comprehensive record of your borrowing and repayments. It entails various financial behaviors such as credit utilisation, timely debt repayments and frequency of credit applications.
When you apply for a Loan or Credit Card, lenders examine your credit history to assess the risk of lending to them. This history is recorded by credit bureaus. They collect and compile information from various financial institutions. The credit history includes data such as personal details, credit accounts, payment history and credit enquiries.
The Importance of Credit History
Credit history is a critical aspect of financial health and stability. It reflects your financial behaviour and responsibility. Here is why maintaining a good credit history is essential:
Loan Approval: Lenders review credit history to decide whether to approve Loan applications for Car Loans, Personal Loans, Home Loans and more.
Interest Rates: A strong credit history can qualify individuals for lower interest rates, saving money on Loans and Credit Cards.
Credit Card Offers: Credit Card issuers provide their best offers, including rewards and low-interest rates, for those with good credit histories.
Factors Affecting Credit History
Credit history is shaped by several key factors reflecting an individual's borrowing and repayment behaviour. Here are the main factors that affect credit history:
Repayment History: Your repayment history is crucial. Timely payments of EMIs and Credit Card bills positively impact your credit history. Whereas late payments, defaults and missed payments can damage it.
Credit Utilisation Ratio: This ratio is the percentage of the total available credit that you are using. A high credit utilisation ratio indicates over-reliance on credit. It can negatively affect your credit score.
Length of Credit History: The duration for which you have used credit matters. A longer credit history provides more data for lenders to evaluate your creditworthiness. A mix of old and new credit accounts can benefit your score.
Number of Credit Inquiries: Lenders perform a ‘hard inquiry’ when you apply for new credit. Multiple hard inquiries in a short period can negatively impact your score. This may indicate potential financial distress.
Building and Maintaining a Positive Credit History
Establishing and maintaining a good credit history is essential for financial stability and access to credit. Here are some key steps to help you achieve this:
Pay Bills on Time: Ensure timely payments for Credit Card bills and Loan EMIs. Set reminders or automate payments to avoid missing due dates.
Keep Credit Utilisation Low: Aim to use less than 30% of your available credit. High utilisation can negatively impact your credit score, so try to pay off balances in full each month.
Limit New Credit Applications: Avoid frequent credit applications. Each hard inquiry can lower your score, so apply for new credit only when necessary.
Diversify Credit Types: Manage a mix of credit types, such as Credit Cards and Loans. This demonstrates your ability to handle different forms of credit responsibly.
Monitor Your Credit Report: Regularly check your credit report for accuracy. You can get a credit report from major credit bureaus such as CIBIL, Equifax and Experian.
Establish Your Credit Record with HDFC Bank Credit Cards
Establishing a strong credit record is vital. You can do so by having an HDFC Bank Credit Card. For instance, the PIXEL GO Credit Card can be a suitable option to build and maintain a positive credit history. Furthermore, HDFC Bank offers tailored Credit Cards to suit various needs. You can visit our Credit Cards page to explore the options available and apply online seamlessly. Get the financial flexibility you need by applying for an HDFC Bank Credit Card.
Explore the range of HDFC Bank Credit Card and apply here.
*Disclaimer: Terms and conditions apply. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Credit Card approvals at the sole discretion of HDFC Bank Limited. Credit Card approvals is subject to documentation and verification as per Bank's requirement. Interest rates are subject to change. Please check with your RM or closest bank branch for current interest rates.
