Our credit rating is something that will undoubtedly affect our financial statuses. From getting a credit card, to the interest you can expect to pay on a loan, to being able to buy a car or even a house – much of it will come down to that rating. Yet despite the large role that credit reference agencies and credit scoring in general play when it comes to our finances, there are some whopping great myths floating around about the whole process!
1. The Credit Blacklist
You’ve probably heard people saying they couldn’t get credit because they’re “blacklisted.” This might well summon up images of a giant database of names of people who should simply be refused when applying for anything financial but… guess what? It doesn’t exist. There’s no such thing as a credit blacklist. Whether you’re the perfect financial track record or you’ve recently been made bankrupt, you won’t be on any such list. Credit reference agencies keep a record of your financial past and any poor repayment history or similar problems will indeed appear – but they certainly won’t result in you being added to any sort of central blacklist!
2. Previous Tenants Ruined Your Credit!
Yes, this is another myth. In much the same way that there is no blacklist for people, there is no blacklist for households or addresses either. Think about it – the banks and lenders want to lend to reliable borrowers. It’s profitable for them to do so. In ruling out an entire household because of the poor financial track record of someone they don’t even know know who just happened to live at their address before them makes no sense. Your credit score is based on your financial history. It is unaffected by the financial history of anybody who lived at an address before you.
3. Checking Your Rating Will Leave a Black Mark
This is another myth. Checking your rating won’t leave any sort of negative mark on your record. Quite the contrary – it is in fact perfectly sensible to keep an eye on your credit rating and make sure you agree that everything kept on file about you is accurate! On the other hand, if you make repeated applications for loans in quick succession and from a number of different lenders, this could indeed leave negative marks!
4. The Credit Agencies Decide If You Get Credit
Nope! It’s the lenders who have the say about whether or not they lend to you. All the credit agencies do is supply them with the data they have on file about you. After that, it’s totally at the discretion of the lender as to whether or not they believe you reliable enough to repay any money you borrow.
Of course, if you have a particularly bad credit rating with a history of regularly missing payments and failing to repay at all, then you’re likely to be turned down. But that’s not at the say so of the credit agency – it’s simply a decision made by the lender based on the information held about you.
5. You Can’t Fix Bad Credit
Another myth. Although information about poor repayments or even bankruptcy etc stays on file for a while (often 6 years), it is possible to begin rebuilding a bad credit record. A mobile phone cnotract or small credit card paid on time every single month can show on your record in a positive light and over time you can actually completely turn around your credit rating.
Don’t be tempted, however, by people who tell you they can fix your record over night! There’s nothing to suggest that this can be done legitimately if your record is accurate. If, however, your record is inaccurate, you are within your right to contest the information held about you!