Debunking myths about credit scores

Checking your credit score is a crucial aspect of your financial well-being. While it may seem daunting, keeping a keen eye on your credit score is an essential step in maintaining financial health. 

Despite this, numerous myths and fears surround this topic. Let's dive deep into these misconceptions and dispel them once and for all.

Myth: You have one credit score

False! There are three main credit scores used in the UK which are reported by the three credit reference agencies, Equifax, Experian and Transunion. Each agency uses different scoring ranges, with Transunion alone having two different scores, which makes comparing between different apps’ scores challenging.

Different score ranges:

• 0-1000 with TransUnion’s newest TrueVision score(used by BuildMyCreditScore)
• 0-710 with TransUnion’s older “Gauge” score (used by Credit Karma & Totally Money)
• 0-999 with Experian
• 0-1000 with Equifax.

Myth: Checking your credit score harms it

False! Monitoring your score is beneficial and won't impact it. These checks register as "soft" inquiries, leaving your score unaffected and never influencing lending decisions. Checking your score should be a regular feature of your financial habits, so do not feel discouraged to check it regularly.

Myth: No credit history equals a better score

False! Credit history showcases your financial behavior. Without it, agencies lack insights into your borrowing habits, potentially hindering your score. Young people and those new to the UK often lack credit history, establishing a credit history through avenues like bank accounts and utility bills is key to proving your financial responsibility.

Myth: Living with someone affects your credit score

False! Your credit report is unique to you, containing only your credit history and behaviour. Sharing a flat with someone won't affect your credit score. Only if you apply for a joint current account or credit product with another individual will it potentially affect your score.

Myth: Once a score is bad it can never be rebuilt

False! A credit report is more than just a snapshot; it's a comprehensive credit history that can be rebuilt over time with healthy credit habits. Rebuilding credit involves consistent timely payments and gaining financial literacy. As negative information ages, such as missed payments -  its impact diminishes, highlighting the importance of maintaining a positive credit history.

Myth: Income determines your credit score

False! While income doesn't directly affect your score, lenders may consider it in lending decisions. Your score reflects payment history and other factors, but income can inform lenders' assessments. Ensuring you keep your credit utilization below 25% and keeping up with your credit repayments is key.

Understanding these myths empowers you to navigate your path to credit growth with more clarity. With BuildMyCreditScore, beat the credit myths and gain control of your credit score!