Most Common Credit Myths
Most Common Credit Myths
When you want to have a good credit score a little knowledge can be very powerful. Remember that a good credit score can open doors to many great credit offers. When you apply for a loan for a home or car or even a personal loan banks and other financial institutions use your credit report to determine if you qualify according to their guidelines.
Here are a few of the more common myths about credit:
People who lived in your residence can greatly affect your credit history.
It doesn’t make any difference at all who lived in your residence before you did as long as they did not share your credit history. The main thing any bank or financial institution is interested in is if you are able to repay your loan. They prefer you have a good history of addresses and the longer you live at any one place the better your chances. Lenders don’t like to see potential customers moving from place to place in under a year or so.
Credit agencies are responsible for your credit references.
Credit agencies are not responsible for your credit references. That is the responsibility of banks and financial institutions. They use the information obtained from your credit report to make determinations along with other data to calculate how much you will pay every month.
Previous debts are not considered when applying for a loan.
Yes they do count when applying for a loan as do court judgments for not paying debts and bankruptcies. These items remain on your credit report for at least seven years. Some items will stay on your credit report for longer than that. Even if you miss a payment it stays on your credit report for at least four years. Banks and financial institutions take these into consideration and think you may not repay them or default on payments.
You may be on a credit blacklist.
There is no such thing as a blacklist because of your origin, race, sex or ethnic origin. It is against the law for any lender to consider any of these when applying for a loan. Some of the factors they do consider are how much you currently owe and if you make your payments on time. They want to be absolutely sure you are not overextending yourself by taking on more than you can pay back.
Who you have living in your home such as family or friends can effect your credit rating
It doesn’t matter who is living with you since they do not have anything to do with your credit rating. The only exception is someone that shares a joint account with you say a joint mortgage. If you do have someone living with you that you have a credit connection with lenders will also look at their credit report as well. The reason for this is if they have late payments it could effect you getting approved for a loan.
These are just some of a few myths people believe regarding their credit score. The fact is that in order to dispel these and other misunderstandings one needs to educate themselves on learning how your credit score actually works and all factors that influence it, to what level and what factors do not influence it. Because caring about your credit score can and will make a difference whenever you seek out credit. A better credit score means your creditors will most always provide a better rate of interest when it comes to repaying your loan. This can amount to thousands of dollars with is nothing to overlook.