Your credit score can affect your life hugely. It may even determine which kind of financial deals you can access.
If you have a good credit score, you’re likely to be offered a personal loan with a low APR. Whereas a poor rating is often met with a higher APR.
It sounds simple, but there are plenty of myths around the subject which leave many consumers confused. To separate fact from fiction, let’s debunk these false ideas once and for all.
Myth: No History Guarantees a Good Credit Score
Although it is true that having a history of things like missed payments on bills can have a negative impact on your credit score, it’s not necessarily true that having no history at all is best. In paying all debts on time, you can build a stronger credit history — it’s an indication to banks and lenders that you manage your finances wisely. And with a good record, you’ll be more likely to be approved for financial services in the future. If you’re worried about your score, there are plenty of ways to improve it with your existing funds.
Fact: Punctuality is Key for a Positive Credit Score
This may sound obvious, but it’s important to remember. If you clear all bills at the end of each month, you’re demonstrating consistency. You’re also showing that you take your financial commitments seriously.
Therefore, punctuality can reap huge rewards for your credit score.
Myth: Your Income Dictates Your Credit Score
Fortunately, income doesn’t affect your credit score. Your bill payment history does, however. At times, this can be influenced by how much we earn. But, regarding your credit score, agencies don’t consider your salary.
All they want to see is that you’re capable of clearing your bills on time. When it comes to your credit score, you needn’t worry about what you’re paid.
Fact: Regular Checks Are Important
Sometimes, errors can appear on credit score reports. Therefore, regular checks could help you to combat any issues, should they crop up.
Doing this once a month could guarantee that you always stay on top of your finances. Monitoring your credit score may even enable you to improve it.
Myth: Marriage Combines Credit Scores
Another myth to bust! Married couples retain their individual credit histories and scores after they wed. If you and your partner should invest in a joint account, that will affect both of your scores. Each separate account, however, will continue to only influence the credit score of the person it belongs to.
So, the credit scores you have now will only ever belong to you, even if you’re married.
Fact: Rental History Can Affect Your Credit Score
Until very recently, rental history couldn’t be used as evidence for being able to make regular payments. This posed a problem for people living in rented property who wanted to take their first step onto the property ladder.
Thanks to petitioning and parliamentary debates, this is a thing of the past. Now, you can use your rental payment record to showcase your finance skills and improve your credit score.
Credit scores needn’t be shrouded in mystery. In quashing its main myths, it’s easy to see that it really is straightforward. Likewise, its key facts underline how simple it can be to enhance a score. What’s stopping you from perfecting yours?
