Top 10 Credit Myths and Facts
Top 10 Credit Myths and Facts
There are so many rumours surrounding the credit industry so it's not surprising that there's so much confusion going on. Our Top 10 Myths and Facts aims to destroy some of the nonsense out there for good.
1. There is no such thing as a blacklist.
There might have been in like the 1970s when the Credit Reference Agencies stored their information differently but ever since then the only information that a lender sees when you apply for credit is your own and anyone who you share a financial connection with.
For peace of mind, why not obtain a free credit report [http://getyourfreecreditreport.co.uk] by signing up for a 30-day free, no obligation trial of CreditExpert or Equifax's Credit Watch.
2. There is no such thing as "Credit Repair" so be sure to avoid these companies like the plague!
These companies prey on vulnerable people who are usually in bad financial situations. They charge you lots of money and claim that they can "repair" your credit report....this is a load of rubbish.
Your credit report can only be amended if the information recorded is not correct in the first place, and then the lender who has recorded the data has to amend this or request that it be amended.
You can also draft a Notice of Correction yourself and send this directly to the Credit Reference Agency and this will be added to your report FREE OF CHARGE.
3. Adverse information cannot be removed from your credit report for a fee.
Sorry folks - this is a myth too. As mentioned above, the lender owns the information, therefore only they can amend this or request an amendment.
4. You do not have a single score or credit rating - every company will assign you a credit score based on the type of customer they're looking for.
Every company that you apply to will already have an idea of the type of person that they wish to lend to. If you don't fit this profile, your score will be low with this specific company.
Accordingly, if you are the type of person that the company is looking for, your score will be high.
5. Previous occupants of your home do not affect your creditworthiness.
This is because lenders can only see your information when you make an application for credit.
Lenders can also see the information of anyone who you have a financial association with, for example, if you have a joint account with a partner, lenders will be able to see your partner's information.
This would also apply to current/previous occupants or third parties at your previous addresses too.
6. Adverse information in your name does not affect your household (Unless you share joint accounts with the person).
Lenders can only see your information when you make an application for credit.
Many years ago, lenders used to be able to see information of people with the same surname as you, but this is no longer!
7. Shopping around for the best deal DOES affect your creditworthiness.
This is because a search will be recorded for EVERY application you make and the more searches you have recorded on your credit report, the lower your score with a lender will be.
Lenders don't like to see too much credit activity as they wouldn't want to grant you credit facilities when you might have too much already.
8. Having high limits on several cards DOES affect your creditworthiness.
At the end of the day, lenders definitely don't want to be lending to you when you've already got too much credit available, so contrary to popular belief, if you've got quite a few cards with high limits this will affect your creditworthiness as the last thing that a lender wants to do is to financially over commit you.
To appear as good a credit risk as possible, make sure that all credit cards that you no longer use are closed before you make that all important application. If you do intend on using a card again, ensure that the limit is as low as possible by contacting the card company to reduce any unwanted high limits.
9. You can get credit if you have a poor credit history.
Yes, that's right, even if you've had difficulties in the past making payments or have defaults, County Court Judgments, or Bankruptcy/IVA information on your credit report.
The lenders who are willing to lend to you will probably charge you a higher interest rate or APR, but it's still definitely possible to get that credit card or loan that you need.
10. Lenders will be cautious in accepting applications from you if you have not had any credit in the past.
This affects a young person who has never had any credit or perhaps someone who has never had to rely on credit before.
This is because a lender wants to establish the type of risk that you might be by looking at how you've conducted your finances previously, therefore if you have never had credit this information won't be available to them.
If this situation occurs and the lender says "NO" for this reason, you might wish to appeal the lending decision and request that a manual lending decision is made by a human being.
Remember, the best thing to do is to be in control of your finances and always look at your free credit report [http://getyourfreecreditreport.co.uk] before you ever make an application for credit.
There are so many rumours surrounding the credit industry so it's not surprising that there's so much confusion going on. Our Top 10 Myths and Facts aims to destroy some of the nonsense out there for good.
1. There is no such thing as a blacklist.
There might have been in like the 1970s when the Credit Reference Agencies stored their information differently but ever since then the only information that a lender sees when you apply for credit is your own and anyone who you share a financial connection with.
For peace of mind, why not obtain a free credit report [http://getyourfreecreditreport.co.uk] by signing up for a 30-day free, no obligation trial of CreditExpert or Equifax's Credit Watch.
2. There is no such thing as "Credit Repair" so be sure to avoid these companies like the plague!
These companies prey on vulnerable people who are usually in bad financial situations. They charge you lots of money and claim that they can "repair" your credit report....this is a load of rubbish.
Your credit report can only be amended if the information recorded is not correct in the first place, and then the lender who has recorded the data has to amend this or request that it be amended.
You can also draft a Notice of Correction yourself and send this directly to the Credit Reference Agency and this will be added to your report FREE OF CHARGE.
3. Adverse information cannot be removed from your credit report for a fee.
Sorry folks - this is a myth too. As mentioned above, the lender owns the information, therefore only they can amend this or request an amendment.
4. You do not have a single score or credit rating - every company will assign you a credit score based on the type of customer they're looking for.
Every company that you apply to will already have an idea of the type of person that they wish to lend to. If you don't fit this profile, your score will be low with this specific company.
Accordingly, if you are the type of person that the company is looking for, your score will be high.
5. Previous occupants of your home do not affect your creditworthiness.
This is because lenders can only see your information when you make an application for credit.
Lenders can also see the information of anyone who you have a financial association with, for example, if you have a joint account with a partner, lenders will be able to see your partner's information.
This would also apply to current/previous occupants or third parties at your previous addresses too.
6. Adverse information in your name does not affect your household (Unless you share joint accounts with the person).
Lenders can only see your information when you make an application for credit.
Many years ago, lenders used to be able to see information of people with the same surname as you, but this is no longer!
7. Shopping around for the best deal DOES affect your creditworthiness.
This is because a search will be recorded for EVERY application you make and the more searches you have recorded on your credit report, the lower your score with a lender will be.
Lenders don't like to see too much credit activity as they wouldn't want to grant you credit facilities when you might have too much already.
8. Having high limits on several cards DOES affect your creditworthiness.
At the end of the day, lenders definitely don't want to be lending to you when you've already got too much credit available, so contrary to popular belief, if you've got quite a few cards with high limits this will affect your creditworthiness as the last thing that a lender wants to do is to financially over commit you.
To appear as good a credit risk as possible, make sure that all credit cards that you no longer use are closed before you make that all important application. If you do intend on using a card again, ensure that the limit is as low as possible by contacting the card company to reduce any unwanted high limits.
9. You can get credit if you have a poor credit history.
Yes, that's right, even if you've had difficulties in the past making payments or have defaults, County Court Judgments, or Bankruptcy/IVA information on your credit report.
The lenders who are willing to lend to you will probably charge you a higher interest rate or APR, but it's still definitely possible to get that credit card or loan that you need.
10. Lenders will be cautious in accepting applications from you if you have not had any credit in the past.
This affects a young person who has never had any credit or perhaps someone who has never had to rely on credit before.
This is because a lender wants to establish the type of risk that you might be by looking at how you've conducted your finances previously, therefore if you have never had credit this information won't be available to them.
If this situation occurs and the lender says "NO" for this reason, you might wish to appeal the lending decision and request that a manual lending decision is made by a human being.
Remember, the best thing to do is to be in control of your finances and always look at your free credit report [http://getyourfreecreditreport.co.uk] before you ever make an application for credit.
