Credit Myths - The truth about Credit

When looking for advice on what things may affect your credit history, there is always the risk of encountering myths. Some of this advice may be well intentioned or even seem logical, but a lot of the time it can lead to actions that do not help improve your credit history and that can sometimes even make it worse.

If you have never checked your credit score or viewed the information that is held on your credit report, you may be in the dark as to what a credit reference agency or lender will consider when calculating a score. Below, we have compiled some of the most common questions about credit scores and credit reports.

What is my overall credit score?

There is no such thing as a universal or overall credit score. When you are given a score by a lender or by a credit reference agency, they are using the specific information they have available to calculate that score. They each may have different ways of formulating a score or may have access to different information. Your credit score is a numerical interpretation of your credit history and as such can vary.

Does checking your credit score affect your rating?

Checking a credit score, such as your Equifax Credit Score will not change the score itself. Being aware of your credit score and the information contained on your credit report can be a useful way of ensuring all the information is correct and understanding factors that may help improve your score. What will be reflected on your credit report is ‘credit searches’ i.e. when you make a credit application and a lender performs a credit check. Looking up your own score is something completely different.

How do you get credit blacklisted?

There is no such thing as a ‘credit blacklist’. Whenever you apply for credit each individual lender is using the information they have available to make a decision. This may be information on your credit report or details from your application. If an individual is rejected by lots of different lenders it may be because their credit history indicates they are at higher risk of default, rather than being ‘blacklisted’.

Does closing old accounts improve your credit score?

Closing an account won’t necessarily improve or lower a credit score, what is more important is how you use your accounts – e.g. if you make all repayments on time, this may be seen as a positive indicator. If you have applied for a lot of credit cards, it may indicate that you are reliant on credit, which may not be a positive sign for lenders. However, if you have old accounts that you rarely use, but have a good history of repayments, this will be reflected in your credit history.

One other thing to consider is that lenders will look at how much credit you already have available and how much you are using, so if you had a large overall credit limit, this may be a negative.

Does my partner affect my credit score?

Living with someone else or being in a relationship would not affect your Equifax Credit Score or be recorded in your credit report unless you are financially associated with them. Financial associations are created when you apply for a joint credit agreement e.g. a joint mortgage, a joint overdraft or joint loan and may have an effect on a loan application if the lender uses associate data in their score.

Do previous tenants affect my credit history?

Your credit history will not be affected by the actions of previous tenants, the only information included is that which relates to you personally. It is also worth checking, however, that the information on your credit report is correct as any fraudulent activity or incorrect information may affect the credit score you are given by a lender or credit reference agency.

Does a criminal record/Do fines affect your credit history?

Neither criminal records nor fines are included in your credit history. What will be included are county court judgements (CCJs) – which can be taken out by someone you owe money to in the event that you do not repay. These will remain on your credit history for six years after the judgement is passed.

Does salary or savings affect a credit score?

Information on your salary or on any positive balance in your bank account is not recorded as part of your credit history. Someone with a high income or a lot of savings may still find it hard to get credit if they have a lot of debts; a history of missed payments or are not on the electoral register.

Your salary or savings may matter when they are included in an application for credit, as they will likely be part of the overall criteria lenders use to decide whether to lend to you. But, for example, they will not affect your Equifax Credit Score.

Does a credit score determine if I get credit?

The credit score that a lender uses will be different from your Equifax Credit Score. A lender may use your credit report and other information that is included on your application to make a decision. A good Equifax Credit Score does not necessarily mean you will always be successful when applying for a loan, credit card or mortgage, but it does give an indication of how lenders might view your application.

Your Equifax Credit Report & Score offers unlimited access free for 30 days and £14.95 a month thereafter. It can help you learn what lenders look for and how they may view your credit worthiness.