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6 Credit Rating Myths

When you are trying to qualify for a loan you are relying on your credit rating for approval. Many people do not understand why they are being denied credit, and if they listen to the many different myths about credit ratings that seem to be floating around the world they could be worried about never being able to get a loan again. Here are six myths about your credit rating that are completely false and that should be overlooked, regardless of what your best buddies may tell you.

Myth 1: The people who lived in my home before me are affecting my credit rating.

  • No. Whoever lived in your home or flat before you has absolutely no impact on your credit rating. Their credit is completely separate from yours and it will always be that way. Lenders are looking at your credit only to see if you can pay a loan. The only reason they ask for your previous addresses is to see if you have had stability in your life. If you register with the electoral roll then your address is confirmed, and that is what the lenders want to see. They don’t care who lived in your place before you.

Myth 2: My family and friends living with me can harm my credit rating.

  • Lenders used to check the credit reports of all of the people who live at your address and they could take into account their credit rating to decide whether or not you qualify for a loan. That is no longer the case unless you have joint accounts with someone else. Only then will the lender look at someone else’s credit rating and be considered with yours to see if you are worthy of the loan. It’s a good idea to know whether or not the person you are trying to get a loan with has a good credit rating, because even if yours is perfect theirs may not be, and it could keep you from getting a loan.

Myth 3: Credit reference agencies decide what your credit rating should be.

  • Credit reference agencies do not decide what your credit rating is going to be. They simply put together the credit reports that contain all of your credit agreements with all of your creditors, court judgements, or bankruptcies. Your lenders actually calculate your credit score based on their own criteria.

Myth 4: I’ve been blacklisted and it’s hurting my credit.

  • There is no such thing as credit blacklisting. Lenders decide if you are worth risking giving a loan to, and they are required to be fair when they review your credit rating in conjunction with the rest of the criteria they base their decision on.

Myth 5: You have only one credit rating that everyone looks for.

  • Actually, you have multiple credit ratings and each one is looked at based on the type of loan you are looking for. Once again, the lenders are the ones that determine the credit ratings and because lenders use different equations to score your credit based on what you are applying for, you have multiple credit ratings.

Myth 6: Past debts don’t count.

  • Oh yes they do. Your past debts stay on your credit record for years, but even if you have missed payments you could still qualify for a loan with a letter of explanation.
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