Given the current economic climate, it’s no surprise that many are wondering about their current monetary situation. With bills mounting up and eagerness to make a future, consumers young and old are increasingly taking loans to get them started with their life goals, or to cover debts that just can’t be quashed.
A credit rating is directly affected by lending and paying money back – and having a good credit rating is essential for borrowing money in the future. You can access your credit score for a small free from any credit report provider – potential lenders will always check your credit report before making a decision regarding whether they should lend to you.
If you’re thinking of taking out a loan and have been looking into getting your report, you may have heard these myths:
Checking your credit report damages chances of being approved for credit
You can check your record as often as you want to, and you won’t leave a footprint behind. However, if you apply to multiple lenders, they will leave a footprint on your report. This is why it isn’t a good idea to apply for multiple credits at once.
Checking your credit report when you can is a wise move for keeping your financial health good – a spokesperson from Yorkshire Building Society noted advised: “Ensure that you are on the electoral roll as this can improve your credit score. Review your day-to-day spending to see if you can make any cuts to increase your savings, then set up a budget for essentials and stick to it.”
Others who live or used to live with you will damage your credit rating
Again, this is not necessarily true – your credit report only contains information about you which a lender needs to see. Your credit history – that is, your history of defaulted payments and loans – will be accessible.
It will not include the credit history of anyone you’ve lived with – unless, that is, you shared a financial product with that person such as a mortgage.
Checking your credit report is expensive
To check your credit report, all you need to do is take a quick internet search and apply with one of the most popular credit report agencies – that is, Experian and Equifax. You’re able to get a one-off copy of your report for only £2, although you can spend more to get unlimited viewings.
Your credit record will be good if you have never borrowed money
It’s a common misconception that if you have never had a credit card or any kind of loan, that you will have a good credit rating. However, lenders tend to be more eager to lend to those who have proved they can responsibly handle credit by paying previous loans off on time and with the full amount.
If you haven’t had a credit agreement before and go ahead with one, if you repay the debt off on time and in full, you’ll actually improve your rating.
Only credit cards and loans show up on your credit report
While credit cards and loans are included on a credit rating, they’re not the only thing that can affect your rating. Missed payments of utility bills and mobile phone bills will be noted on your record – and this can adversely affect your legibility for lending in the future.