Customer Enquiries 0161 464 3944 For Coronavirus (Covid19) help and support click here Secured Loans > Unmasking Common Financial Myths Unmasking Common Financial Myths 7th January 2016 | Published by Evo Money There are several common financial myths that carry on circulating, despite being misleading. It makes good sense to get up to speed on the most common of these so that you can get the most out of your financial planning. Common Myth 1: Lending decisions are decided by credit reference agencies The purpose of a credit reference agency is to put together and store your credit report safely. They do not make lending decisions; they are simply providers of your credit footprint. The lenders are the ones who will ultimately decide whether to proceed, and they do this based on several different criteria — not exclusively your credit rating score. Common Myth 2: Past debts don’t follow you Sadly, for many of us debts accrued in the past do count. If you have any IVAs (Individual Voluntary Arrangements), non-payment of debts or bankruptcies to your name from the past six years, these will show upon your credit history. Even something as seemingly innocuous as a missed repayment on a credit or store card can affect your rating, as there may be a red flag for unreliability, something that most lenders are very wary of. After six years, though, the slate will generally be wiped clean as far as your new lender is concerned, as a historic debt is not necessarily relevant to your current ability to repay a loan. Common Myth 3: If you’ve borrowing for the first time, you’ll get a better deal If you are borrowing for the first time, the lender will have no basis on which to predict your future reliability. This can in some cases be a basis for them to turn you down. Many lenders will be reassured, though, with some proof of good financial management in some form. Many people worry that if they are self-employed they will struggle to find a lender. In reality, there are several companies out there who will take your individual circumstances into account and will happily offer a self-employed loan. Common Myth 4: Credit ‘blacklists’ exist There is actually no such thing as a credit blacklist, and your gender, ethnic origin and religion are all entirely irrelevant to your credit rating. Many lenders will require an accurate picture of your current financial circumstances — how much you owe in total and your repayment history to date. A responsible lender will want to ensure that you are not taking on a financial burden that you will not be able to manage. Common Myth 5: Others living under the same roof can affect your credit rating Friends and family that you live with will not affect your credit unless you share a financial connection such as a jointly held mortgage, for example. Living with someone is not the same as having this connection. Common Myth 6: If you repay your credit cards in full, your credit score will lower This is just not true. In reality, you’re actually likely to get an improved credit score, as it is evidence both that you are able to manage your borrowing and can afford it. A lower score will come as a result of always making the minimum repayment, missing repayments or borrowing up to the very top of your credit limit. Common Myth 7: It’s irrelevant how many credit accounts you have Lenders need to be certain that you are able to afford additional credit, so they will look on an application more favourably if you don’t already owe significant sums across several accounts. They may also give preference to applications from customers who do not rely heavily on their current credit agreements. Ideally, you should aim to keep your borrowing on credit cards to under 25% of your limits. Related news: The top myths about borrowing money The truth about your credit score Five years on, are we still feeling the impact of the financial crisis? How to borrow safely Financial markets react swiftly to Tory election win Category: Money This post was written by Evo Money Warning: Late payment can cause you serious money problems. For help, go to moneyhelper.org.uk Latest News Why ‘kerb appeal’ really matters We’ve investigated what exterior features can make your home more attractive to prospective buyers, and even increase its value. We… Read More Credit Scores Around The UK We explore the regions that have the highest and lowest average credit scores Related news: House prices likely to soar… Read More The top myths about borrowing money The top myths about borrowing money (and how to stop your money concerns) The act of borrowing capital for it… Read More Evolution Money receives Feefo Platinum Trusted Service Award 2020 Evolution Money are delighted to have won the Feefo Platinum Trusted Service award, an independent seal of excellence that recognises… Read More THINK CAREFULLY BEFORE SECURING DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE OR ANY OTHER LOAN SECURED AGAINST IT. 24.12% APRC Representative Variable Maximum APRC: Maximum APRC for loans greater than £12,514.00 is 58.37%. The maximum APRC is representative of Plan 7 based on a term of 12 months and a loan amount of £12,514. 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