Six common credit myths: the truth about credit

There are a lot of myths about debt, credit reports and credit scores which can be easily misinterpreted. Often hearsay surrounding credit is shared with good intentions, but could hold back your credit history from being the best it can be.

Here we demystify some of the misinformation about the world of credit to help you make better financial decisions.

1. There’s a credit blacklist

Luckily there’s no such thing as a blacklist. Lenders make decisions based on the information on your credit report, your application form details and any account information they already have. If you do have a history of poor borrowing, then you could still be accepted but you’re likely to be offered lower credit limits and higher interest rates.

2. The people you live with can affect your credit

Credit reports are individual, and only contain your personal information. Living with someone doesn’t mean your credit reports will be linked or have any impact on each other, unless you’ve applied for joint credit together.

3. Being in a relationship links your finances

Being in a relationship doesn’t mean your credit report, or finances, are linked together. The only way to link your credit reports is if you’ve applied for joint credit together in the past, for example for a bank account, loan or mortgage. If you have previously taken out credit with someone, but don’t share any joint accounts now, you can ask for a financial disassociation with all the credit reference agencies.

4. Previous house occupants affect your score

This is a common myth, especially when people are living in rented accommodation. The previous occupants of your address do not have any impact on your finances or your credit report. There may still be letters that come to the address, so all you need to do is write on the front they don’t live there and stick them back in the post box.

5. Checking your credit report affects your score

Checking your credit report doesn’t affect your score. It will show on your report as a soft search each time you check, but this is only seen by you and nobody else. You can check your Experian Credit Report and score as often as you like, which is usually a good idea before you apply for credit.

6. I have one credit score

There is no universal credit score. Each credit reference agency will give you a different score on a different scale. Of course, the higher this is with each agency the better.

When you apply for credit, lenders don’t use this score. They use your credit report information, your application details and any recent history of previous accounts with them to calculate an overall score for you. It’s this final score that helps them decide whether to accept you or not, and sometimes what the rate will be.