Credit history refers to a consumer's past credit actions. Detailed on a credit report, it is a consumer's record of incurring and repaying debts. A credit score is a numerical expression of a consumer's creditworthiness, which is derived from elements in a consumer's credit history.

The most commonly excepted consumer credit score is a FICO Score. Created by the Fair Isaac Corporation, this score weighs a consumer's payment history, amount of debt, length of credit history, new credit and diversity of past credit to create his or her credit score.

Payment history and amounts owed are given the largest amount of weight, accounting for 35% and 30% of the score, respectively. Length of credit history accounts for 15% of the credit score, and new credit and diversity of credit account for 10% each. Information from each of the three major credit reporting bureaus (Experian, Transunion and Equifax) is used to create the FICO score, but only information from the last seven years is used.

In most cases, information that is over seven years old is removed from your credit report. If you made a late payment, had a bill go to a collection agency or declared bankruptcy, those negative marks are removed from your credit report after seven years. However, Chapter 7 bankruptcy can stay on a report for up to 10 years, and tax liens may also stay on your report.

To create a detailed credit history of a consumer, credit reporting bureaus collect information from creditors on amount of money borrowed, type of loan, date account opened, late or timely payments and recent credit inquiries. In addition to creditors, courts, collection agencies, landlords and utility companies may also send information to the credit reporting agencies, and as a result, consumers may have information about bankruptcies, liens, judgments or collections accounts on their credit reports.

To determine the creditworthiness of an individual, a lender may read his or her credit history or credit reports. However, a credit score gives lenders a snapshot to easily and quickly assess a borrower's credit history and thus his or her future creditworthiness, without having to read every element of the credit report.

FICO credit scores range from 300 to 850, but scores must be over 650 to be considered good or excellent. Scores lower than 659 are considered to be below average. A score in this range indicates that you have had trouble repaying debts in the past or that you have too much open credit or too much recent credit. A score between 660 and 724 indicates that a borrower has a relatively long credit history and a mostly positive history of loan repayments. Scores above 720 indicate that a borrower is dependable with a solid credit history.

  1. Why don't I have a credit score?

    Learn about some of the reasons why you might not have a credit score, and find out how you can build a good credit score ... Read Answer >>
  2. How is my credit score calculated?

    Wonder how your credit is calculated? Learn the criteria that go into determining your FICO credit score – the measure that ... Read Answer >>
Related Articles
  1. Personal Finance

    How Your Credit Score Compares to the Average American's

    While only a small percentage of Americans have terrible credit scores, a whopping 30% have poor or bad credit, according to the Consumer Financial Protection Bureau.
  2. Personal Finance

    How to Read Your Consumer Credit Report

    Learning how to read your consumer credit report is vital, as it includes important information about your credit history.
  3. Personal Finance

    The Importance Of Your Credit Rating

    A great starting point for learning what a credit score is, how it is calculated and why it is so important.
  4. Personal Finance

    The top 3 credit bureaus

    Learn about the top three credit bureaus: what they do, how they develop your credit score – and why the credit scores they assign you may differ.
  5. Personal Finance

    Getting Your Credit Score from a Bank

    That all-important, once-secret number is now easy to obtain from financial institutions and credit card companies.
  6. Personal Finance

    The 5 biggest factors that affect your credit

    Are you in the process of getting a loans? Learn how credit companies use these factors credit companies rely on to determine whether to lend to you and at what rate.
  7. Personal Finance

    Your Credit Score: More Important Than You Know

    Credit scores affect key aspects of your personal and professional life. Knowing your score and managing your credit input can make a big difference.
  8. Personal Finance

    Is Your Credit Score at 850? It Can Be!

    Use these tips to increase your credit score and your ability to get low interest rates on loans.
  9. Personal Finance

    More Banks Offer Free (Actual) FICO Scores

    Lenders overwhelmingly use the FICO credit score when it comes to determining creditworthiness. And thanks to a new initiative, consumers can see it too.
  1. Good Credit

    Good credit is a classification for an individual's credit history, ...
  2. Bad Credit

    A qualification of an individual's credit history that indicates ...
  3. Credit Limit

    Credit limit is the amount of credit that a financial institution ...
  4. Negative Information

    Data in a consumer’s credit report that lowers his or her credit ...
  5. Adverse Credit History

    Adverse credit history is a track record of poor repayment history ...
  6. Beacon Score

    The Beacon Score is a credit score generated by the Equifax Credit ...
Trading Center