Credit history contains data on active and repaid loans, amounts, terms, and any late payments. Banks and other lending organizations provide this information, which is stored in a credit bureau.
Based on this information, creditworthiness is assessed when applying for new loans. Late payments reduce approval probability and worsen offered terms; absence of history is also not advantageous, as lenders have nothing to rely on for assessment.
A common misconception is that history only deteriorates with major violations. Minor regular late payments also matter, including small credit card debt: consistency is evaluated equally with the amount.
Practical advice: before applying for a major loan, it makes sense to review your own credit history in advance and check it for errors. Incorrect entries—for example, about a loan you didn't take or a repaid loan listed as active—do occur and can be corrected upon request by the subject.