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Three credit rating myths busted

The world of money can be a bit of a head-scratcher. Credit ratings, in particular, can throw up a lot of questions. What exactly are they and how can they affect you? We bust three myths that could trip you up.

Have you ever tried to get out credit such as a credit card or a contract to pay for your mobile phone ?

One of the ways a bank or lender decides whether to lend you this credit is by looking at your credit report. Your credit report will include information such as your bank accounts, including any outstanding loan agreements or anybody you are financially linked to.  

People often get nervous at the idea of a credit report, but there are a lot of myths clouding the waters. Here are three of the most common – and the true facts!

1. A bad credit rating is for life

This is the one that tends to worry people the most. But it doesn’t have to – as it’s completely false.

Missing or late payments stay on your account will stay on your credit file for six years. It’s a long enough amount of time that you should try to avoid it as much as you can, but if you do find yourself in a difficult situation it doesn’t have to mean you’re stuck with it forever.

2. Checking your own credit report too often can adversely affect your rating

This is another one that pops its head up a lot, but it’s also not true.

You can check your credit report as much as you’d like without affecting your rating. It’s worth having a quick check if you think you might be applying for credit soon.

However each time you apply for credit it will show up as a record on your credit report. So if you’re applying for lots of credit it will affect your credit rating. To avoid this, try not to open too many lines of credit at the same time. So for example, if you’re getting a new credit card, avoid setting up other accounts at the same time such as mobile phone accounts. After you’ve got your new credit have a quick check to see how it’s affected your credit report.  

3.You could find yourself on a universal credit blacklist

Like Santa’s naughty list, there’s no such thing as a universal credit blacklist.

Different lenders look for different things when they are accessing your credit report, and deciding whether or not to lend to you.  

To try and keep your credit rating healthy, there are a few things you can do to help improve it. Stop applying for credit as soon as you find yourself in difficulty, as you can create a spiral that way.

Also, a little known fact – getting on the electoral register can also help. Our blog post gives you four ways to improve your credit rating.

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