Your Credit History: How to Establish and Maintain “Good” Credit

Your Credit History: How to Establish and Maintain “Good” Credit

Credit History

A person’s history of honoring debts and repaying obligations is used by lenders to determine the individual’s creditworthiness. A borrower’s past ability to repay indebtedness is a major factor used by lenders to evaluate a loan application, with the credit history investigation helping lenders determine whether to extend credit, and on what terms. Credit reporting agencies operate on a national basis, and a person’s credit history (good or bad) will follow them wherever they go in the United States.

Tradelines (types of debt) that commonly appear on one’s credit history include:

•    Mortgage Loans    •    Personal Loans
•    Credit Card Loans    •    Unpaid Utility Bills
•    Auto Loans    •    Tax Liens (federal, state, etc.)
•    Student Loans    •    Non-payment of Music/Movie Club Charges

By signing a loan or credit application, the consumer allows lenders to conduct an investigation into their credit history. Loans paid on a timely basis will typically remain on a report for 3-4 years following the loan’s pay-off of date. Loans containing delinquent payments can remain on a report for up to 7 years, and bankruptcy information may be reported for as long as 10 years. Unfortunately, when it comes to accurate, negative information, only the passage of time can ensure its removal.



Each year, our staff receives consumer inquiries from high school and college students asking about the best way to establish and maintain a good credit history. Many first-time borrowers utilize a co-signer on their first loan and build up their credit scores; others ensure a positive credit history by repaying their student loans in a timely fashion. Some first time borrowers pledge a portion of their savings account balance (passbook loan) as loan collateral. When approaching a credit opportunity, consumers new (and old!) to the credit process should proceed with caution, and should only assume debt when their income will allow repayment to be made in a timely, consistent fashion.  Think before you borrow!

How to Establish and Maintain Good Credit

While it’s never too early to establish good credit, consumers should approach the use of credit cautiously. Potential debtors should carefully consider whether or not they can afford the addition of a new monthly payment before signing on the “dotted line.”
Tips to Earn (and Protect) Good Credit   
•    Pay all your debts on time (or early) to keep finance charges low and strengthen your credit score.  To avoid interest charges altogether, pay cash when possible!
•    Don’t skip payments – instead, re-budget non-essential items.
•    Borrow only what you can afford, and always utilize credit responsibly.
•    Annually obtain a copy of your free credit report and check for inaccuracies by going online at www.AnnualCreditReport.com,
or  -  calling 1-877-322-8228.
•    Keep copies of sales slips and loan statements to help resolve any disputes which might arise.
•    Don’t lend your credit card to others. Immediately report a stolen or lost card to the issuer to limit fraud and avoid possible complications with your credit history.
•    Know the difference between “wants” and “needs.” While you may really want an expensive new vehicle, exotic vacation or luxury item, you might not need it. Think carefully before undertaking major purchases on credit by calculating the effect of a new monthly payment on your personal finances before agreeing to the new debt obligation.

A file freeze is a block you place on a consumer report, that prohibits consumer reporting agencies from releasing your credit report, credit score, or any information contained within the report to all creditors (except your current creditors) without your express authorization.  Maine law permits all residents to impose a file freeze on their credit reports with the three credit reporting agencies (Equifax, Experian and TransUnion). If you are a victim of identity theft and have filed a police report, then the process of freezing your credit report files is free of charge.  If you are not the victim of identity theft, each credit reporting agency can assess a $10 fee to freeze your file, plus an additional $10 for a general "unfreezing" of your file or an additional $12 if you want to unfreeze your file so that only a specific creditor can view that file.