The biggest credit myths debunked!

We’re here to help you become financially savvy yet we know that the world of money and finance is full of misconceptions and myths

So we are here to debunk some of the more common credit myths and give you the confidence to take control of your finances. 

Top credit myths

1. Your credit score is the “be all and end all”

FALSE! Have a read of our blog post “Do we really need to worry about our credit score” for all the information that you need on why credit scores do not exist! There is no one universal credit score and all the agencies use different means of working out scores – hence why we prefer to refer to it as your credit file or credit history. 

2. If your partner has a bad credit file, it will reflect on you

FALSE! Your credit file is specific to you. The only way that your partner’s bad credit history will reflect negatively on you is if you are financially linked to them, i.e. you hold a joint mortgage or credit card with them. 

3. Your address could be blacklisted

FALSE! Remember that your credit file report is a personal record and therefore whether the previous occupants of your address had CCJ’s (County Court Judgements) coming out of their ears, it will not impact upon you. 

4. Borrowing less makes you more attractive to lenders

FALSE! We can see why people believe this myth. Surely borrowing less and staying out of debt is a good thing? It is, but lenders like to see that you have been accepted for credit and you are managing the repayments well. That makes you a more attractive prospect with less risk attached. 

If you did not borrow at all then no credit history has been built up and the lenders are unlikely to take a gamble on someone who has no prior credit repayment activity. 

We’re not saying go out and max out on all credit cards that you can get your hands on. Be sensible. Build credit history up slowly – take a credit card out and put your food shop on it each week. Just remember to pay it off in full and on time each month!

5. Bad credit history means no credit cards

FALSE! Even with a bad credit history, you can still obtain a credit card. Yes, the best rates will possibly be unobtainable but higher interest rate cards will be available.

If you are in this position, take the higher rate credit card and start using it sensibly to build a good credit history. This means small purchases, paying off in full every month, etc. 

6. You need to sign up to a credit agency with costly monthly memberships in order to check your credit file

FALSE! This used to be the case but no longer. Since the introduction of the GDPR, agencies have to provide your credit file report to you for free. Have a look at our recent blog post about how to go about obtaining your report for free here. 

7. There is a credit blacklist

FALSE! There is no such thing as a blacklist. Lenders make their decisions based on your credit report, your application form and any existing information that they hold on you. 

8. Checking your credit report impacts on your negatively

FALSE! Checking your report shows up as a soft search, only seen by you and therefore does not impact either way. 

9. Having a criminal record affects your credit history

FALSE! Criminal records and fines are not included in your credit history. Things like CCJs (County Court Judgements) or bankruptcy rulings are. These will remain on your credit file for six years after the judgement has been passed.

We hope that this has provided you with some clarity on the most common myths surrounding credit. Let us know if it has helped!

Read here to find out how to check your credit report file for free!