Comman Misconceptions About Credit Reports

There are many factors creditors consider before offering credit. Here are some common un-truths about the process.

Help - I’m on a credit blacklist.

There’s no such thing as a credit blacklist. If you are a serving bankrupt or an in an IVA, then this is recorded on the insolvency register and well as your credit report - just preventing you from obtaining further credit.

Any given lender who has problems with you in the past, plus other companies within the same group, has the right not to lend you money again, but this is not a black list extending across the financial sector.

If you are on debt management, then typically this will result in defaults. However most people requiring debt management already have some adverse credit history. They are better off concerning themselves with the repayment of current unsecured debts rather than the ability to borrow more.  In the end, debt management will improve a credit rating as repayments are affordable and the debt is paid off.  

Previous occupants at your home affect your credit rating.

Not true. It does not matter if you’ve got debt collectors knocking at the door. (This has happened to me), or you live at an address previously inhabited by a millionaire.
Leaders want to know about your ability to repay credit, and not about people with whom you have no financial connection.

Family members with the same surname affect credit rating

Until a few years ago this was true. What is even more unfair was that anyone at your address with the same surname was presumed to be a relative, even if this was just a coincidence.

Currently, your credit report details people to whom your have a financial connection such as a joint bank account or joint mortgage. If your associate has a poor credit report, it could affect deal you are offered - even if your own record contains no defaults.

Credit reference agencies decide your credit rating.

Credit reference agencies do not make decisions as to whether you are accepted for credit.
They just collate information held in credit reports and hold it securely. This information includes credit agreements you have, such as credit cards, loans and mortgages, your repayment history and whether you have any court judgements against you or have been made bankrupt or are in an IVA.
Any given lender will us this information, along with their own criteria to decide on the credit offer, if any, they are prepared to make to you.

Where I live means I can’t get credit.

This is called red-lining and is illegal, it does not happen in the UK. The notion is that your estate or street etc is a no go zone for lenders.

You have only one credit rating

Not true. Every lender uses different equations to calculate a credit score. They also use different versions for different type of loan or credit facility.

Past debts don’t count

Unfortunately, they do, even if don’t own a penny today, all adverse information remains on your credit report for a period of time. Defaults remain on your report for 3 years and CCJ’s for 6 years. A bankruptcy stays on record for at least six years and a bankruptcy restriction order for up to 15 years.

A credit repair company can fix my report.

They can help you fix information that is incorrect, but they can’t erase or change correct information or add infomation this is untrue or misleading.

There are steps you can take to “clean up” a credit report, for example you can apply for a notice of disassociation to be added to the report stating you have no current financial dealings this someone you’ve previously had a financial connection with.

Anything a (so called) credit repair agency can do - you can do yourself, see fixing credit reports.

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