4 Myths about credit ratings busted!
BY READERS DIGEST
1st Jan 2015 Managing your Money

Whether you’re taking out a loan or simply want to check, the reality of your credit report is often better than you think
What is a credit rating?
A credit report gives lenders an idea of whether you’re likely to repay a loan or not. If they don’t like what they see, they won’t lend you the money or may not give you the best rate. However, credit ratings and reports can be easily misunderstood. Here are the most common credit-rating myths—and the truth behind them.
A bad credit rating is for life
This is the one that tends to worry people the most. But it doesn’t have to—as it’s completely false. Missing or late payments will stay on your credit file for six years. It’s a
long enough amount of time that you should try to avoid it as much as you can, but if you do find yourself in a difficult situation, it doesn’t mean you’re stuck with it forever.
Credit ratings only affect mortgages, loans and credit cards
If you’ve got a poor rating, you might find you’re rejected when you try to switch energy provider, bank account and even your mobile-phone contract.
Each time you apply for credit, it’ll show up as a record on your credit report—which can be a bad sign to lenders. To avoid this, try not to open too many lines of credit at the same time. If you’re getting a new credit card, for example, avoid setting up a mobile-phone account simultaneously.
You could find yourself on a universal credit blacklist
There’s no such thing as a universal credit blacklist. Different lenders look for different things when they’re deciding whether or not to lend to you. One tip is to stop applying for credit as soon as you find yourself in difficulty, as that can create a spiral. Getting on the electoral register can also help.
Checking your own credit report damages your rating
This is another one which pops up a lot, but it’s not true. You can check your credit report as much as you like without affecting your rating. In fact, it’s worth having a quick check if you think you might be applying for credit soon, or if you’ve got any new credit to see how it’s affected your credit report. You have the legal right to see a copy of your report for £2. There are three main credit-reference agencies you need to check: Experian, Equifax and Callcredit (via the Noddle website).
Some offer a free trials for a month—and Noddle is entirely free—but you’ll have to provide your credit- or debit-card details.