If you are reading this, then you probably know how important your credit rating is. However, there is a lot of misleading information that you might come across. This information can do more harm than you can imagine. It is perfectly normal to feel overwhelmed with everything you read, especially if you are worried about your credit score.
Let's bust these 5 credit rating myths.
1. It will always be bad
In case you already have a low credit rating, then reading the following “bad credit rating lasts forever” will surely discourage and demotivate you from doing anything in order to improve it. In Bulgaria, for example, the bad credit rating lasts 5 years. After those 5 years pass, you will find yourself with a clean credit rating, ready for a new beginning. However, there are still a lot of things you can do to improve it. Bear in mind that when those 5 years pass, your poor financial habits can easily put you back in the same position that you have just escaped from.
2. It takes a long time to ruin it
This is not only the worst myth of all but also the most convenient one. Believing in a scenario where it takes a long time, if not years, to ruin your credit rating can surely lead to reckless behavior and bad financial habits. The reality, however, is a bit different. To go from a good to a bad credit rating can happen extremely fast, to be exact – in a matter of a few months. And if this is not a big enough of a motivator to make timely payments and be very strict about your credit, then we don’t know what is.
3. Forget about being “approved”
Yes, banks pay attention to your credit score – that’s a fact. Nonetheless, their final decision is a combination of many factors, such as your income and others. Remember, even if your credit is not ideal at the time, this doesn’t mean that you cannot apply for financing at a bank or alternative lender (See how we lend).
4. Your income
Bear with us for a moment – your income has nothing to do with your credit rating. The fact that you have a low income (at the time) should not trick you into thinking that your credit rating will suffer because of it. The same goes for the opposite – the fact that you have a good income does not mean that you can neglect your credit rating and count only on the fact that you have a stable income. Believing in both will surely mislead you.
5. Your significant other
Many people believe that marriage can hurt your credit rating. Of course, we are glad to say that this is not true. If your significant other has, in fact, a low credit rating, that does not mean that after marriage, this will affect yours too. If you want to apply for a loan or a lease as an individual, then you shouldn’t worry about that.