Your Money & Your Life
  • Home
  • Your Life
  • Your Money
  • Your Business
  • Watch
  • Buy The Book
Your Money & Your Life Separating fact from fiction: The five biggest myths about credit scores
  • Your Money
    • Latest
        • Don’t think you’re not a scam target

          Don’t think you’re not a scam target

          June 24, 2022
        • How to know what you’re entitled to this EOFY

          How to know what you’re entitled to this EOFY

          June 2, 2022
        • It’s definitely time to cancel services you don’t use

          It’s definitely time to cancel services you don’t use

          April 7, 2022
  • Your Life
    • Latest
        • Finding the best kid’s savings accounts is certainly not child’s play

          Finding the best kid’s savings accounts is certainly not child’s play

          May 2, 2022
        • Teens and money: Help your teen unlock the power of compounding

          Teens and money: Help your teen unlock the power of compounding

          April 25, 2022
        • It’s time to take control and set some debt limits

          It’s time to take control and set some debt limits

          April 22, 2022
  • Your Business
    • Latest
        • 5 things that self-made millionaires do differently

          5 things that self-made millionaires do differently

          March 1, 2022
        • Thinking of joining an MLM as your side hustle? Read this first

          Thinking of joining an MLM as your side hustle? Read this first

          February 23, 2022
        • 10 business lessons from a lemonade stand

          10 business lessons from a lemonade stand

          December 9, 2021
  • Watch
  • Buy The Book
  • About
Small Business & Finance Network
Advertise
Partner Content

Separating fact from fiction: The five biggest myths about credit scores

Martin Wanless - May 11, 2021 3 MIN READ
Get Credit Score

In partnership with

Whether you’re buying a home or a car, taking out a business loan or applying for a credit card to help flatten the monthly cash flow, applying for and accessing credit is part of life – and often essential for businesses to grow.

Being actively aware of your credit score, and knowing how you can improve it, is pretty important. After all, it can affect the finance offers a lender will be able to make to you, and it can affect your future plans too.

It used to be that your credit score was cloaked in mystery, lurking in the shadows – and how it was calculated was a closely guarded secret.

Did taking out that credit card improve our score? Or did it have a negative impact because we had credit?

Well, it was cloaked in mystery… until now.

Here are five of the biggest myths about credit scores explained and debunked.

Myth 1: Nobody really looks at your credit score anyway.

Woah! You need to be having words with whoever told you that one, because nothing could be further from the truth. Your credit score (a number between 0 and 1200 – ‘good’ is normally from 600 and upwards) is looked at by a whole host of people. Anyone to which you apply for a loan or credit of any description (from banks and non-bank lenders, to store cards and utility providers) will likely take a peek.

It’s also common for telco and utility providers to run credit checks on prospective customers, to verify you’re likely to pay your bills. If you own a business and you’re taking stock from suppliers or placing large orders, suppliers can also run a credit check on you and your business. In short, your credit score may well be looked at a lot more than you think.

Myth 2: Why worry about my credit score? I can’t control it.

You shouldn’t worry about your credit score, but you should be aware of it – and yes, you definitely can control it! Ultimately your credit score can affect whether or not you get credit or a loan in the first place, and what interest rate you pay on it.

It can affect whether or not you get a new car loan approved, or whether a tradie will give you credit or ask for payment upfront. Even if you’ve made some financial mistakes in the past, you can proactively improve your credit score.

The first step is to understand what contributes to your credit score, and then work on establishing a good record. The credit enquiries made over the past five years and your repayment history are the two biggest contributing factors to your overall score, so by limiting enquiries to only the essential and ensuring you pay on time, every time, you can start boosting your credit rating.

Myth 3: Using your debit card improves your credit score.

Debit cards and prepaid cards don’t make one jot of difference to your credit score – it’s the same as using cash.

It’s the responsible use of credit cards and other lines of credit that can positively affect your credit score.

Myth 4: If you have no debt, you’ll have a good credit score.

Not necessarily – because lenders are looking for evidence that you can repay on time. Credit providers are looking for evidence that you’re a responsible borrower, and that they can trust you to meet your payment commitments. If you’ve not had credit for a long time, how do they know?

Building up a good credit score in advance of applying for a home loan, for example, could give you a better chance of being offered a better interest rate than you would have been offered if you’d never accessed any finance before.

Myth 5: If you check your own credit score, it has a negative impact.

If you check your own credit score with GetCreditScore, it’s what’s classed as a ‘soft’ enquiry – meaning it doesn’t leave a dent on your credit file.

When a lender requests your credit report, it does leave a dent – and those dents can add up. It’s a wise move to check your credit report every now and again – you can keep track of those credit enquiries and, importantly, correct any mistakes that are on there. If there’s an error on your credit report, you need to know and get it taken off – pronto!

Find out your credit score for free at GetCreditScore.com.au – it’s safe, easy and takes less than a minute.

This article is brought to you in partnership with GetCreditScore.

Previous article How to decide what to invest in
Next article Kochie breaks down Budget 2021: Everything you need to know for your business, job, home and family
Via Partner Content
Tags Credit cardsDebtMortgageYour Money
Martin Wanless

Martin is an experienced freelance writer and content strategist, specialising in finance, insurance, tech and HR. He’s been creating B2B content in the UK and Australia for over 20 years. Before co-founding his own small business bywanless.com.au in regional NSW, he was head of content at a Sydney agency for the best part of a decade.

Share This
  • COMMENTS

Trending

  • Save money with these frugal tips - 101 tips 101 ways to save money and live a richer life
  • Stop doing stupid shit with money Stop doing stupid shit with your money
  • Sort your shit out and retire rich Sort your shit out and retire rich
  • 10 commandments of tax by Kochie Kochie’s 10 commandments of tax
SUBSCRIBE TO KOCHIE'S FREEWEEKLY NEWSLETTER

Weekly money, life and business news delivered to your inbox.

  • This field is for validation purposes and should be left unchanged.

Latest News

ATO property investment crackdown News ATO crackdown on property investors
David Koch - July 1, 2022
Think you have to be old or naïve to be a scam target? Think again. Your Money Don’t think you’re not a scam target
David Koch - June 24, 2022
Here's how to avoid the fixed term loans cliff News Don’t fall off the fixed term loans cliff
David Koch - June 17, 2022
RBA credibility News The RBA has started to rebuild its credibility
David Koch - June 10, 2022
NAB Now Pay Later launches News Yet another BNPL entrant… and it could be the best of the lot
David Koch - June 3, 2022
Claim deductions in your 2021-2022 tax return Your Money How to know what you’re entitled to this EOFY
Gerry Incollingo - June 2, 2022
Help to Buy scheme - this is what it means for you News A quick rundown of the new Help to Buy scheme
David Koch - May 27, 2022
Housing affordability is the best its been in 30 years News Housing affordability is the best it has been in 30 years… wait, what?!
David Koch - May 27, 2022

  • About Your Money & Your Life

Privacy Policy. Disclaimer: Your Money & Your Life contains general financial information only. It should not be relied on as finance or tax advice. You should obtain specific, independent professional advice from a registered tax agent or financial adviser in relation to your particular circumstances.
Copyright 2021 Pinstripe Media - Digital Publishing and Video Production Agency Sydney
ADVERTISE