Credit scores impact many aspects of our lives, but many myths persist about what does and doesn’t affect them, according to financial experts. Credit card company Aqua has compiled and debunked six common misconceptions.
To improve your credit score, the company recommends checking your credit report regularly, getting a credit card to build a credit history, paying bills on time, keeping debt under control, and putting in place debits.
Sharvan Selvam, Commercial Director of Aqua, said: “It’s important to separate fact from fiction when it comes to credit scores to ensure you take the right steps in your credit journey. Using a trusted source for your financial information and talking to your bank or credit provider will help you make better financial decisions and find the right credit product for you.
Six popular credit score myths busted
“I only have one credit score” – false
No one has a single, static credit score. Each credit reference agency uses different measures and criteria in their calculations.
‘Checking my credit rating affects my credit rating’ – true and false
There are two ways to check your credit score.
Simplified credit check: a first look at your credit report that can help you assess the success of a credit application. It does not affect your credit score.
Rigorous Credit Check: A more thorough credit check used by lenders. This impacts your credit score and remains visible on your credit report for up to two years, but only affects your credit score for one year.
“Better pay and more savings equals better credit” – false
Although your income and savings are taken into account to determine your ability to repay the amount of money you will borrow, they have no influence on your credit score.
“I’ll get the best deals if I’ve never borrowed” – false
If you’ve never borrowed, you’re actually more likely to be rejected for the best deals on credit cards, mortgages, and loans. There is no way for a lender to see that you will be able to make your payments successfully.
“Paying off my credit cards in full lowers my credit score” – false
Paying off your credit card statement balance in full each month is a great financial decision that can boost your credit score. By paying down your balance, you can reduce your credit usage, which is better for your credit score.
“My credit score is horrible, but the damage is done and there is nothing I can do about it” – false
It may take time, but you can take a few simple steps to positively affect your credit score. These include registering to vote or closing accounts you are not using.