A letter of credit history can be an important factor in determining your financial future. A letter of credit history can help reduce or eliminate the chances of being turned down for apartments or possibly a loan. Letters of credit history have one basic function--to attest to your handling of credit--and can be of great importance.
A letter of credit history is exactly as the name implies; it is a letter stating your credit history with a certain vendor. This can be a statement which says you have been, and are, a customer who has paid his bills on time and have no outstanding charges. It can also be in the form of a payment summary from a former provider for a certain amount of time before the date of the statement.
The function of a letter of credit history is to prove to a future vendor or provider that you are a worthy of having credit extended to you. Usually a letter of this type can be used in lieu of a security deposit for a utility or sometimes a property owner. The letter acts as a passive guarantee that you will not become a credit risk or liability.
Having a verifiable letter of credit history can greatly assist you in obtaining new service or new living arrangements. It shows to the future provider that you are capable and responsible in paying monthly bills on time. Without such a letter you will likely need to provide a security deposit in the amount of at least one month of service before the provider creates your account.
If you are getting a final bill, or paying a final lease payment, you can ask for a letter of credit history to be given with the bill or receipt. This way you can readily provide the letter to future vendors without having to waste time with requesting the letter or the time it takes to obtain the letter in the mail.
A letter of credit history must show a consecutive on-time payment of a previous account. Usually the guidelines for this are at least 12 consecutive months within the previous two years. It also must show that, during this time period, you were not late more than two times or never had service disconnected for non-paymen.
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