The quantity of credit and financial myths we constantly read online astounded us at Moolr. We decided it was past time to debunk a few of them.
Financial Myths – Blacklists Are Not Really A Thing
You’ve certainly heard about the dreaded “blacklists” that people are put on if they fall behind on payments or have a bad credit history. There is no such list, and any company will simply evaluate your credit rating when deciding whether or not to enter into a deal with you. Only factual information about people is displayed by credit reference organisations, the majority of which is provided by lenders. Furthermore, credit ratings do not consider race, ethnicity, religion, or gender.
In 2013, three-quarters of those polled by Which? believed that having a low credit rating automatically meant lenders would “blacklist” them. Those considering bankruptcy frequently believe they will be added to a fictitious blacklist.
Your Address
Do previous occupants affect your rating? No. A former occupant would only appear on your credit record if you had a financial relationship with them; otherwise, it is not something to think about. The only thing that matters about an address is how long you’ve lived there — the longer, the better, because lenders value stability, which may be demonstrated by a protracted stay at a same location.
Those With Little Debt Have Better Ratings
Lenders like those who borrow more than once, which may sound unusual. This is because it allows them to identify trustworthy spenders. However, individuals who have never decided to borrow have no way of knowing how trustworthy they would be if they applied for credit. After all, the credit reporting organisations don’t have access to any savings or investment information. Thus, they can only rely on the credit report. Regular credit with regular repayments is a near-guarantee of a positive credit report. This is as long as you’re on the electoral roll, don’t move around much, and don’t have any criminal records!
Financial Myths – Ratings Are Affected By Those You Live With
Living with someone does not immediately establish a financial relationship, and hence has no bearing on your credit score. It would only effect the report if there was a clear financial link. If you have joint financial ties, a lender may look at their credit history as well while evaluating an application because their circumstances may influence your capacity to make payments. If you live with someone who is negatively impacting your credit score when they shouldn’t, you can have a “Notice of Disassociation” filed on your credit report, which removes the other person’s ties.
Everyone Has A Set Rating
Not true. As previously stated, each lender uses its own criteria to determine whether or not to accept an application, and even the same lender may use various criteria for different products, thus your “score” may range from lender to lender and product to product. The three major credit bureaus are Experian, Equifax, and CallCredit, and while the majority of the information on each company’s report will be the same, whether it’s a bankruptcy, a missed payment, or a person who has never taken out credit, there may be some minor differences, with some reporting extra information gleaned from other sources.
A Rejected Application Affects Your Rating
A prevalent misperception is that a denial will not only harm your credit score but will also eliminate your chances of obtaining credit elsewhere. This is not correct. Any company that searches your credit history leaves a trace. However, it is a very minor one (as discussed in the next myth). It would take several loan applications to make a significant dent. As a result, such actions are not advised (as it also suggests financial desperation to potential lenders). If, for example, a lender rejects you for a loan, the denial will not appear on your credit report. It will simply demonstrate that they have conducted a search.
