Credit reports can seem a little confusing. Here we expose the truth about 10 credit scoring myths!
If you’ve ever applied for any type of credit, whether it’s a ready, mortgage or credit card – you will know all about the importance of having a voucher about https://bridgepayday.com/ Credit Report. After all, if you have a clean credit history, you’re more likely to get a better interest rate on the product you’re asking for. And if your credit rating isn’t up to par, your application is likely to be rejected.
However, credit ratings can get a little confusing, and it’s not always clear exactly what affects it – in other words, what can negatively impact it and what can help improve it. . So, here we are going to shed some light on the 10 Biggest Credit Scoring Lies.
Checking my credit report will damage my credit rating
This is a lie! Checking your credit rating on a regular basis is a very good option and you don’t have to worry about leaving “footprints” if you do this. Because quite simply, you won’t. And that means checking your credit report won’t reduce your chances of being accepted for credit.
Checking your credit score doesn’t have to be expensive, either. In fact, you can sign up for a free trial of your credit report of Experian. Remember to cancel your subscription before the end of the 30-day trial period, to avoid being charged in the future.
Alternatively, you should be able to grab a copy of your credit report for £ 2.
There is a credit blacklist
This is a lie! There is no credit blacklist. A lot of people believe that there is a list out there of people who should never be loaned money – ever.
But this is not true. Credit bureaus don’t decide your credit rating – whether or not you can borrow money depends on the lender involved, and some will say yes when others say no. They simply look at the information on a credit report and then decide whether or not to lend the money.
Credit reference agencies only hold factual information and do not exclude entire geographic areas. They also don’t take your gender, race, political beliefs, or religion into account when you apply for credit.
My credit rating could be affected by previous owners
This is a lie! If the people who previously owned your home were in debt, your credit report will not be affected. Lenders only perform credit checks on individuals and not on addresses. This means that the lender will only see information about you.
Your file follows you to your address and the previous occupants take theirs with them.
My credit rating can be affected by the people I live with
This is a lie! Likewise, those who live with you have no impact on your credit report – unless you are financially tied to them. So, for example, if you share a mortgage or bank account with someone, your credit history will be logged. This is the case even if you do not live at the same address.
However, if there is no financial connection, your roommates’ credit records will not affect yours.
If I receive a denied credit, it will appear on my report
This is a lie! The credit reporting agencies will not know if you have been accepted or refused for credit, so it will not be recorded on your credit report.
The fact that a lender has reviewed your credit report (with your permission) will be recorded and this “ fingerprint ” will show the date of the credit check, the name of the organization you requested and the type of credit you requested. But it will not show the success of your application.
I only have one credit score
This is a lie! You don’t have a bachelor credit rating or credit rating. Lenders use their own equations to establish a credit score and this differs between banks and between types of products. So you could have a score for a credit card application and a completely different one for a ready application, for example.
Lender rating systems can vary widely, giving points for all different aspects of the information on your report and application. This scoring system is based on how you’ve handled credit in the past, along with information about your situation and whether or not you can afford the credit you’ve applied for.
I have never applied for credit so my credit report is perfect
This is a lie! You wouldn’t be the only one who thinks that if you’ve never had to apply for credit before, your credit rating will be impeccable and lenders will jump at the chance to let you borrow money. However, lenders actually prefer to see a history of debt paid off quickly because it shows that you can manage your borrowing well. Well-managed debt will show up on your credit report, but your long-term credit banking history will not.
So if there is no proof that you were able to borrow and repay the money on time, you could be turned down.
Having inactive accounts will not affect my credit rating
This is a lie! If you have a lot of unused credit on multiple accounts, it makes sense to close some of them or ask for lower credit limits. This will likely alleviate lenders’ concerns that you might be maximizing all that available credit and getting into trouble.
Also, having a lot of inactive accounts puts you at risk of fraud, as you are unlikely to notice if someone is using a credit card you haven’t touched for months.
Having said that, some lenders will also look at your income when assessing affordability and if they see that you can easily handle multiple credit products, they likely won’t be affected. However, if you have maxed out all of your credit cards and are now applying for more credit, you may look desperate and as a result some lenders will be turned off.
Overall, you are better off keeping your borrowing levels well below what you can afford and below your borrowing limits. You should also avoid excessive unused credits and close dormant accounts.
Changing my checking account will affect my credit rating
This is a lie! When you apply for a current account some lenders will ask you how long you’ve been with your bank and incorporate stability indicators like this into their credit rating. Some lenders may also ask you how long you have been at your current address and in your job.
However, these are small factors, and your credit rating will factor in a whole host of other things. As a result, any impact of the change current account is probably very, very small. So don’t let that stop you from finding a better account!
Bad credit scores are lifelong
This is a lie! Typically, bad credit will stay on your personal credit report for about six years.
It is possible to rebuild your credit rating, so don’t think there is nothing you can do about it. To get started, you need to make sure you are on the voters list. It is also important to try to settle your debt as much as possible and not to maximize your credit. Finally, don’t apply for more credit than you can afford, and don’t apply multiple times over a short period of time.
For more tips read Improve Your Credit Score: Dos and Don’ts Quickly.
Just be aware that any company claiming they can fix your creditworthiness or remove debts from your credit report for a fee – these can often be very expensive and in return you will get very little or no advice. So don’t fall for it.
If you are struggling with your finances, you can get great advice absolutely free! Lily Where to get free debt advice for more information.
Remember, if you are curious to learn more about your credit rating, you can get a free credit report via lovemoney.com to help you determine exactly where you are. Good luck.
This is a classic lovemoney article that has been updated
Learn more about credit ratings:
How to improve your credit rating
What REALLY Hurts Your Credit Rating
How to build a great credit history
After: 10 steps to a perfect credit report | 5 tips to boost your credit rating