Life after debt

Myth Busting: Credit Ratings

Posted 09 March 2015

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How does your credit rating affect your life? Can you still get credit with a low score? Learn the answers to these, and other questions, in our handy guide.

Credit ratings often scare people, and it’s not all that surprising really when you consider that a poor credit rating can affect your ability to get a number of things. So, if you’re planning on doing anything that requires you to have your credit history checked, you’re going to need to pay attention to your credit rating.

First let’s look at what you’re likely to need a credit history for. These days credit checks are used for many things, including renting a house, buying a property, buying a car, in fact anything that requires another person trusting that you’ll pay them when you say you will. They’ll use it to assess your reliability and then make a decision as to whether they want to take a risk on you or not.

However, your credit history is not the only thing a lender will use to decide if you’re a good risk or not. They’ll also have an application process of their own that they’ll put you though. So, you could say that the credit report is simply a starting point.

Myth 1 … Everything appears on my credit report.

Thankfully, this is not true. Your credit history is not a full inventory of your whole life, it’s really just a set of data about your financial situation. Some things that are mistakenly thought to appear on credit histories, are:

Personal details about you

Nope, nothing personal about you is held on your credit file. It doesn’t contain anything about your race, religion, political beliefs or your ethnicity. Your medical history and your criminal record are also not available.

Student loans

If you took your loan after 1998, it will NOT appear on your credit report. So, if you took your loan before 1998, it will show up. However, as student loan repayments are taken directly from your wages, before they’re paid into your bank account, there’s really no chance of you having missing or late payments.

Council Tax arrears

Data on your payments is never shared by your local council, so if you miss a council tax payment it will not show up on your credit history.

Your partners’ details

If you’re living with another person, you may think that anyone checking your credit history will be able to see the details of other people living at your address. They can’t!


Many people think their credit history will have details of how much they earn, it doesn’t. But most application forms that require some kind of credit check will probably ask you to confirm how much you earn anyway.

Myth 2 … Checking my score will affect it.

Only certain checks show up on your credit history when you access it. 'Soft checks', the ones you carry out when you check your own file, are not visible when other lenders check. However, when you apply for more serious credit, such as a mortgage for example, it will show up, as it’s classed as a 'hard check' and reveals much more detail about you. Performing multiple hard checks may bring your credit score down, as it may be interpreted as being desperate for credit.

Myth 3 … There’s only one database that all lenders look at.

It would certainly be easier if there were, but there are actually three different databases that lenders access in the UK: Experian, Equifax and Call Credit. Lenders will share information with all three and they usually hold the same data. Some may have different bits of information, pulled from different places, that’s all.

Myth 4 … I’ve never had credit, so I’ve never paid late or missed payment. My score should be brilliant, right?

You’d think that would be the case, wouldn’t you, but it’s not. This is because lenders want to see how you’ve dealt with your credit in the past. They are checking things like if you pay on time, and if you pay the right amount. If you’ve had no credit, ever, this kind of detail will not be available for you and, as a result, the lender will not be able to assess the risk of lending to you. This will probably lead to them declining you for credit, even though you’ve done nothing wrong.

Myth 5 … Once a missed or late payment is put on the file, it’ll be on there forever.

No it won’t! The maximum time a note stays on your file is 6 years. Once the six years has passed, the note disappears.

Myth 6 … Mistakes cannot be changed.

If something ends up on your credit history that you think is wrong or a mistake, contact the credit reference agency as soon as you notice it. They’ll ask the company who supplied the data to confirm that it is correct. If it is found to be wrong, they’ll give authority for it to be changed. They should also inform the other credit reference agencies too. If they don’t agree that it’s a mistake, you should speak to the credit reference agency to see what they are able to do about it. Some will help you escalate the query to a third party, who will arbitrate (act as a judge) for you and decide if the note on your file is fair or not.

The key thing to remember is that your credit history is only part of what creditors use to make a decision about lending to you. So, even if your score is really low, it does not automatically exclude you from being accepted.

by Kyri Levendi

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