Smashing The Credit Rating Myths
It used to be said that there were two certainties in life – death and taxes. Today you can add a third – credit. It is almost certain that at some point during your life you are going to need to apply for credit.
This credit may be either be in the form of a credit card, charge card, hire purchase, personal loan, home loan, etc. When you apply for the credit, the credit provider is almost certainly going to subject you to a credit rating check. This credit rating check will be undertaken with a credit rating agency. However, the murky world of credit rating agencies means that many of us don’t know what’s going on, and guess how our credit rating is calculated by the agency. To answer any concerns you may have, the following will help you to bust some of the more common myths that surround credit ratings.
I only have one credit rating
True, you do. However, each credit rating agency [In the UK, the two main agencies are Experian and Equifax] will contain information about your credit history. Moreover, each lender will likely ask specific questions that relate to the nature of your credit.
For example, a credit card provider might not ask the same questions as a loan company will. As there is more than one credit rating agency, and far more than one credit provider, the number of credit ratings you can have is numerous and will always be left to the interpretation of the credit rating agency and credit provider – depending on your needs/requirements. In short, your credit rating is a subject rating.
I can obtain a credit rating report at any time
True, you can. But you may be surprised to know that it is unlikely that this is going to be a score out of 10. Far more likely is that it will be a report provided by the credit rating agency that details your credit history. It is this information that the credit provider then uses, subjectively, to determine your credit risk. Thus, if the information in the report is wrong, it is imperative that you make sure it gets changed.
It is easy to improve my credit rating
Yes and no. If you listen to certain debt consolidation service providers, then yes it is easy. The truth is more complicated.
If you don’t already have a credit history, because you have never applied for credit before, then you can improve your credit history, following a few tips, that means you soon leave a trail of good credit history. Be careful though, create too much of a credit history in too short period, and this might even work against you!
If you already have a bad credit history, then it is going to be a long hard process for you to improve your credit rating, regardless of what anyone else may tell you to the contrary. As such, it is vital that you start this process as soon as you possibly can.
- Credit Building Tactics
Much is written about credit ratings, the score against an individual’s name, that rates their eligibility for credit. This article discusses different methods that you can use to try and build a new, better credit rating.
I’m on a credit blacklist
This always a popular myth. In fact, credit rating agencies do not have a master-list that names all people who shouldn’t be allowed access to credit under any means. Nor, for that matter, do they have an individual list that they keep. What UK credit rating agencies do is provide credit providers with a report on your previous credit history. Nowhere in the report will they make any comment on the benefits of whether or not the credit provider should give you the credit or refuse you the credit. This is down to each individual credit provider to decide.
I’ve been refused credit before, so no use applying again
Not at all. Just because you have been refused credit before does not mean that you will automatically be refused credit again in the future. In fact, you may even find that you have been refused credit because you have too good a credit rating. The overall important fact that you need to keep in mind is that each lender will interpret
