January 16, 2020
Almost one in five people believe checking their credit rating could have an impact on their credit score. But that’s not true. You can check your credit report as often as you wish without any impact. Myth number one, busted. 
What Is A Credit Score? Plus 6 Common Myths, Busted
Money matters can be confusing, and finances puzzle the best of us – so if you’re as confused about credit ratings as we are, you’re not alone.
We spoke to credit reference agencies, Experian and Equifax, to bust some commonly-held beliefs when it comes to the enigma that is a credit score and credit report (yes, they are two different things). 
But, first up...What is a credit score?Glad you asked. In simple terms, a credit score (or credit rating, same thing) is a “statistical assessment of your creditworthiness” – basically, a score of how likely it is you’ll repay any money you’re lent. Your score will depend on how much you’ve accessed products like credit and store cards, phone contracts, and your overdraft.
You start building a credit history from the age of 18. Everybody has a credit score, even if you don’t know what it is, and it will be assigned to you by a credit reference agency (CRA) – an independent organisation that securely holds data about you. There are three main credit reference agencies in the UK: Experian, Equifax and TransUnion, and they’re all authorised and regulated by the Financial Conduct Authority (FCA).Related... The New Overdraft Changes Explained There are hundreds of banks and lenders that contribute information to these agencies. Alongside that, the agencies will find out other things about you. Are you on the electoral register? Do you have any court judgments? Have you filed for bankruptcy?
All this information paints a picture of what type of customer you’ve been in the past, to give a reflection of what you’ll be like in the future. And your credit score is a handy way to sum this up.
Here’s where it gets a little confusing. Lenders can give you another credit score when they’re calculating whether to give you access to one of their products – for example, a bank when you apply for a credit card. They determine the score using a report from a credit reference agency and the information you provide on your credit application form.
“Every lender follows a different policy for credit scoring, so if an individual does not meet the criteria of one lender, they may still be able to get credit from another provider,” an Equifax spokesperson tells HuffPost UK. 
Your credit history for the past six years is predominantly what affects your score. If you’ve used several lines of credit, and made expected payments on time, you’re likely to be in the lender’s good books.
A higher credit score indicates a lower risk to lenders. Those considered “low risk” typically qualify for a wider range of credit products, and are likely to end up securing the best deals. A lower credit score could mean lenders see you as too risky to lend money to, so it may impact your ability to get a mortgage or loan.
Some factors that might impact your credit score include:Total unsecured borrowing (this refers to money you borrow that isn’t secured against an asset you own, like your home) – the lower the better,Number of late payments in the last six months – again, the lower the better,Number of credit products applied for in the last six months – the fewer the better,Whether you’re registered on the electoral roll – seen as a positive sign,The number of court judgments you have – the fewer the better,Credit invisibility – having little or no credit history can leave people with a poor credit score. Related... How To Start Saving Money Like The Financially Responsible Adult You Are Now you’re up to speed, here are some common credit rating myths, busted.Myth #1: Checking your credit rating impacts your score.Checking your rating does not impact your score. Simply checking your score or report is called a “soft” inquiry, which doesn’t affect your rating. A “hard” enquiry however, such as when you apply for a new credit card, does affect it. So applying for lots of products in one go would probably ring alarm bells and bring your score down a peg or two.
You can check your credit score free of charge by signing up to a credit reference agency. If you want more detailed reports on your credit history, it’s likely you’ll have to pay.Myth #2: You only have one credit score.There is no universal credit score, explains Equifax. Each credit reference agency may give you a different score on a different scale, so you can have more than one.
As mentioned above, you can get a different score from an agency or lender. If, for example, you signed up to Equifax to find out your credit score and then applied for a credit card at a bank, the bank wouldn’t use the score given to you by credit reference agencies, it would come up with its own.
“[The bank] would use your credit report information from the agency, your application details and any recent history of previous accounts with them to calculate a score for you,” Equifax says. “It’s this final score that helps them decide whether to accept you or not, and sometimes what the rate will be.”Myth #3: Previous tenants can impact your credit score.If the people who lived in your home before you had terrible credit scores, that does not pass on to you – but people believe this is the case, especially when living in rented accommodation.
The previous occupants of your address do not have any impact on your finances, states Equifax. If letters are coming to your address and they’re addressed to previous occupants, write on the front of the envelope that they don’t live there anymore and stick them back in the post box.Related... The Best Savings Accounts: A No Nonsense Guide For Every Saver Myth #4: Being in a relationship links your credit scores. You can’t absorb another person’s credit rating simply for being in a relationship with, or married to, them. People’s finances are only linked if they apply for joint credit together, such as a loan, mortgage or bank account, says Experian’s spokesperson. You can’t get joint credit cards in the UK, so they don’t count.
However, it’s worth noting that if you are linked to someone else because you took out a credit product together, and apply for credit in your own right, the lender can – if it wishes – review the credit history of the other person as well.
If you previously took out credit with someone (say, an ex), but don’t share any joint accounts now, you can ask for a “financial disassociation” with the three main credit reference agencies. This will then de-link your credit report from the other person, explains James Jones, head of consumer affairs at Experian.Myth #5: Anyone can see your credit score.Lenders can see your credit report when you agree to a check – whether they can see your score will generally depend on the relationship they have with the agency. Other organisations can also review your report, usually with your permission, including landlords and employers, says Experian’s spokesperson – although what they see may be restricted.
Your partner can’t see your credit score – and vice versa – even if you’re financially linked. If you ask to see a copy of your credit report, you will not see your partner’s financial information – you will see their name, address, date of birth, the date you became linked and the account (lender name) you are linked by on your report, but nothing else.
The only way your partner can see your credit score or the contents of your credit report is if you physically share it with them.Myth #6: You can’t dispute your credit score.If you don’t agree with your credit score, you can let the credit reference agency know – it will then raise a dispute on your behalf and has the power to amend the record if the organisation that helped provide it (eg. a bank) agrees.
“If they don’t, you can add your own comments to the entry [report], called a ‘notice of correction’,” explains Experian’s spokesperson. “If you are unhappy with your score, you should contact the agency that calculated it and they will try to help you.”
It’s important to get this sorted before making another credit application, as too many applications in a short time period may be viewed negatively by lenders, says Equifax. This could affect your ability to access new credit elsewhere. Related... How To Learn To Love Exercise In 2020 – Not Just Suffer Through It How To Delete Your Dating Apps And End Up Anything But Lonely How To Reduce Your Carbon Footprint And Buy Less Junk In 2020
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