Being able to pay for all things all the time without credit is just a dream. It hardly happens to anyone unless they are independently wealthy. Since we all have to buy things like houses, cars and other big items by borrowing. It is significant that we all have a past of responsible borrowing to show our potential creditors. This is called a credit history. The better your history of borrowing, whether it’s a student loan, a car loan or a house mortgage, the higher your credit score will be. If you have a high credit score (higher than 650) you are likely to be offered a loan by a reputable bank or other lending institution at a lower interest rate.
A good first step in establishing a credit history is to apply for a credit card. The idea is to pay whole balance amount at the end of billing cycle that is every month. This demonstrates to future creditors that you are a responsible borrower who will not default on your loans. Paying off the balance will also help you avoid those high interest rates charged by credit card companies. Good credit ratings are achieved by always paying off balances. If you never miss a loan payment, you have a good credit history.
To qualify for a loan from lending organizations like a bank, you must have a credit score between 300 and 800. Many people, especially young people and women have no credit history. Thus, when they want to buy a car or a house or start their own work, they can not because they have no credit rating of their own.