Top Myths about Credit Reports

Credit reports are the tool that banks use to assess your credit history, and they in turn decide if you are worthy of credit.  Following is a list of the common myths about credit reports.

Credit reference agencies decide who gets a credit card

These agencies are paid to compile data on everyone.  Credit Card companies are responsible for making the decisions about whether you get a credit card or not.  The banks make an assessment of the risk and profit that applies to a certain credit card.  That in turn is translated into a credit card score.  If you apply for a credit card and have that score or higher,  they’ll give you the card.

You get the best deals if you’ve got no credit history

If you’ve got no credit card history, there’s no way for the credit card companies to assess your case.  This means they’re unlikely to give you a card.  This is why student credit cards are so common.  The bank can give students a bad credit card, with minimal credit and minimal risk, it gives the student an opportunity to build up a credit score and the credit reference agencies time to generate a score

I’m on a credit card blacklist

Your credit rating doesn’t take account of your colour, religion or place of birth.  Credit card companies are only looking for one thing from customers, whether they can make a profit on them.

Paying off all of your credit card debt is bad for your credit card score

The opposite is true, if you can pay off your entire credit card debt, it demonstrates you can manage your credit card debt.  On the other hand, making late or skipping payments is going to definitely have an adverse effect on your score.

My credit score can be affected by people who’ve lived at my address

Unless there is a financial connection between you and the previous resident, then it doesn’t have any bearing on your credit score. The reason they ask for your previous address is so they can check if you’ve got any outstanding debts at that address.  Conversely, if you do share a joint account with someone, then your credit score will definitely be affected by theirs.

It doesn’t matter how many credit cards I have

The way your credit card score is calculated is based around the risk you present.  If you are exposed to a lot of debt, credit cards or otherwise, then you present a greater risk.  This affects your credit score.

There is only one credit score

There are multiple agencies which provide credit scores.  The way these scores are interpreted varies from product to product and company to company.  Your score is also dynamic, and will change based on your behaviour; missing a repayment could lower your score, while paying off a card could improve it.

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