I’ll let you into a secret, I love these types of posts. There is so much disinformation out there on social media and on websites that it’s easy to find credit myths to bust.
When those myths are around something as important as finance or credit, it’s even more important to bust them.
Get your finances wrong and it can throw everything off for months, or even years.
Get your finances right and you can set yourself up for a lifetime of financial success.
That’s why I love busting myths!
So let’s get on with the show.
Credit Myth 1 – You damage your credit score just by checking it
Not true. You should regularly check your credit report with Experian, Equifax or TransUnion. Checking it has no impact on your credit score whatsoever.
A credit report check uses a ‘soft enquiry’ which has no impact on your score. You’re entitled to one free credit report per year per credit agency and I strongly recommend using them.
Checking your eligibility for a credit product like a loan or new credit card can impact your score. That’s because it can require a ‘hard enquiry’ which remains on your report.
Credit Myth 2 – If one lender turns you down, they all will
I have seen this one lots of places online. If you apply for a credit card or loan with one bank or lender and they turn you down, other lenders will also turn you down.
Not true. Different lenders have different lending criteria. Just like we all have different ways of working, so do financial institutions. For example, one lender may regard being self-employed as a risk while another lender won’t, which is why they all do it differently.
I would recommend using an eligibility calculator before applying for something if you think you may be turned down, just in case.
As with myth 1, an eligibility check uses a soft enquiry so won’t impact your credit score. It should give you an idea of whether you would be accepted or not.
Credit Myth 3 – You should avoid using credit at all costs
Not strictly true. You don’t have to avoid using credit at all if you can afford it.
The trouble comes if you borrow more than you can afford to repay or you would be left financially exposed if something happened.
Use credit wisely, never borrow more than you can afford and always pay on time and credit can be very useful.
I use credit cards all the time. It’s a good way of shopping abroad and offers extra insurance on purchases over £100.
As long as you set up a direct debit for the minimum monthly payment, shop around for the best value credit product and make sure to always pay on time, it’s not something you necessarily need to avoid.Credit
Credit Myth 4 – If my spouse has a low credit score mine will go down too
Not true. Your credit score and credit report are your own. There is a section within the report that mentions people you have financial connections with but their situation doesn’t impact yours.
The only time it will is if you take out credit together like a joint mortgage or loan. Then your financial futures are joined together.
Their credit score may impact the amount you can borrow or the interest rate you’re charged but otherwise, it should not impact you.
Credit myth 5 – If you get into trouble with credit, you’re on your own
Not true. Not true anymore thankfully. Not all that long ago, getting into financial difficulty was taboo. We didn’t acknowledge it, didn’t talk about it and there certainly wasn’t the kind of help there is today.
Thankfully things have changed. There are debt charities out there like Citizens Advice and even your lender has tools to help.
The key thing to remember is to ask for help before you miss a payment or get in too deep.
Your lender and debt organisations can often do a lot more to help you before you default rather than after.
I could go on and on busting myths. There are so many out there and I enjoy this so much, I write for pages and pages.
I won’t bore you with that though but I will create more myth busting posts over the coming weeks and months!
Do you have any myths you want busted? Want me to highlight a particular situation to others? Tell me about it below!
