Your character's history is one of the most powerful tools to aid in
role-playing, yet it is the one most often overlooked. A character
history, if done well, can add layers of depth to a character, supply a
creative GM with an endless supply of adventure ideas, and make the
character seem to come alive, rather than just being a piece of paper
with numbers on it.
A good character history should be written up on a separate piece of paper, and should be about a page long (unless your character has had a really boring or exciting life). The older your character is, the longer the history should be.
This history should be fairly modest, for the simple reason that most people actually do have fairly humble beginnings, despite their achievements later in life. Some characters will start off with a spectacular history (some people really are born princes), but the vast majority will not.
Ideally, the history should also give the GM ideas for adventures based on your character's past, which are much more interesting because they affect you personally, rather than just being a typical "retrieve some thing that some faceless guy wants back" job.
Keep adding to the history as you go through adventures, and it will provide you with a chronicle of your character's heroic deeds through the years. This can be important if you move the character from one campaign to another, as it helps the new GM get a good idea of what your character is all about right from the start.
You might even keep a diary or journal from your character's point of view. In this case, you would probably make up entries dating back some time for the history.
A few things that your character's history should include are: