5 Credit Myths Explained
Over time myths and urban legends grow up around certain things and become accepted as fact and credit is one of the most popular areas for these things to spring up in.
What we’re going to do in this article is look at some of the most frequently quoted myths and debunk them for good.
1. Having Poor Credit Will Always Stop You Getting Finance
This is not the case at all. For a start it depends why you had poor credit in the first place. Life happens and lenders know that as much as you and I do. If you have a good reason, and I do mean a good reason, you can try to explain it to a lender. Many times they will look past a particular period and see if before that you had a good credit rating. If they can see that you were a good credit risk in the past and they can verify your reason for falling behind a lot of lenders will take a chance with you. It may only be for small amounts to start with but it will at least help you get your financial reputation back on track.
2. You Can’t Get Credit If You Are Receiving Public Assistance
Myth number two is based on the misconception that anyone receiving public assistance is a bad credit risk. Clearly that’s not the case as there can be many reasons why someone is receiving benefits this way. It’s also illegal to discriminate against recipients of public assistance under The Equal Credit Opportunity Act (ECOA).
3. There Is Only One Credit Score
This myth is one of the most frequently quoted ones. The reality is that there is no single “magic” figure because of a number of factors that are taken into account by lenders. These factors not only vary from company to company but they can change as payments become due and get paid. The actual credit score will be calculated at the time that someone requests a credit report on you.
4. Credit Repair Agencies Don’t Work
This one is false but, and it’s a big but, these companies do not do anything that you cannot do on your own and for free. If you decide to use one of the many companies offering this service instead of doing it yourself then you need to be aware that they can’t charge you until they have fully completed the work on your behalf. This is set down in federal law under The Credit Repair Organization Act to protect you from rogue operators.
5. Employers Can’t Check Your Credit Report
This one is in fact partly true. Any potential employer who is thinking of recruiting you may want to satisfy themselves that you have financial integrity by requesting a credit report on you before making a job offer. Your current employer may also wish to check or re-check your financial standing before offering a promotion. However in either case they can’t do it behind your back and under federal law they are required to get your written permission in advance.
Over time myths and urban legends grow up around certain things and become accepted as fact and credit is one of the most popular areas for these things to spring up in.
What we’re going to do in this article is look at some of the most frequently quoted myths and debunk them for good.
1. Having Poor Credit Will Always Stop You Getting Finance
This is not the case at all. For a start it depends why you had poor credit in the first place. Life happens and lenders know that as much as you and I do. If you have a good reason, and I do mean a good reason, you can try to explain it to a lender.
Many times they will look past a particular period and see if before that you had a good credit rating. If they can see that you were a good credit risk in the past and they can verify your reason for falling behind a lot of lenders will take a chance with you. It may only be for small amounts to start with but it will at least help you get your financial reputation back on track.
2. You Can’t Get Credit If You Are Receiving Public Assistance
Myth number two is based on the misconception that anyone receiving public assistance is a bad credit risk. Clearly that’s not the case as there can be many reasons why someone is receiving benefits this way. It’s also illegal to discriminate against recipients of public assistance under The Equal Credit Opportunity Act (ECOA).
3. There Is Only One Credit Score
This myth is one of the most frequently quoted ones. The reality is that there is no single “magic” figure because of a number of factors that are taken into account by lenders.
These factors not only vary from company to company but they can change as payments become due and get paid. The actual credit score will be calculated at the time that someone requests a credit report on you.
4. Credit Repair Agencies Don’t Work
This one is false but, and it’s a big but, these companies do not do anything that you cannot do on your own and for free.
If you decide to use one of the many companies offering this service instead of doing it yourself then you need to be aware that they can’t charge you until they have fully completed the work on your behalf.
This is set down in federal law under The Credit Repair Organization Act to protect you from rogue operators.
5. Employers Can’t Check Your Credit Report
This one is in fact partly true. Any potential employer who is thinking of recruiting you may want to satisfy themselves that you have financial integrity by requesting a credit report on you before making a job offer.
Your current employer may also wish to check or re-check your financial standing before offering a promotion. However in either case they can’t do it behind your back and under federal law they are required to get your written permission in advance.
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