There is a wide variety of myths and legends about credit histories. Without understanding most of them, you risk your welfare.
Below is a list of the most common misconceptions about credit histories.
Not knowing the principles of operation of your CI may cost extra costs in the future in the form of, for example, an increased interest rate on a loan.
1. If I check my CI myself – I will worsen the situation.
Not. If you are interested in your story, it can not worsen it. Such an interest rather speaks of your responsibility. You can check your credit report as many times as you like, however, it can be done free of charge only once a year.
2. Income affects credit rating
Your total income, of course, can affect the amount of credit you can take, and it can show which monthly payment is best for you. But it cannot affect your credit history score. Data on your previous and current employers may appear in the credit report, but income is not.
3. Bad credit history is forever.
Absolute delusion. If you begin to regularly pay all your debts and late payments, these actions are reflected in your CI. After some time, you will definitely notice a positive result. Credit rating varies from month to month, from payment to payment. Make a habit of not delaying payments, and there will not be a trace of a bad credit history.
4. Personal bank account may affect CI
Your accounts receivable are not directly linked to the credit report and are not listed in them. But it is important to monitor their condition and, in the case of uselessness, to close them in time. Since they may be charged a fee, for example, a fee for an SMS confirmation, and in the case of non-payment of such fees, arrears appear, but it may affect the credit rating score.
5. If you make payments on time there will be a good credit history.
Of course, the absence of credit arrears and regular timely payments are the main factors affecting the final score in the credit report. But there are other points to consider. Payment history, the amount of your debt, the age of the history, the new loan taken. There are a few minor factors, but by making a mistake in at least one of them, you can get a reduction in the score.
6. Opening a new loan may worsen your credit history.
A new loan can indeed lower the score, but only if it is only under the condition of a strict check of your CI. Most often, unless of course you plan to collect a large number of loans immediately, a new loan will most likely have a positive effect on your reporting document in the future. Provided, of course, timely payments of all payments on the loan.
7. Closing a credit card will improve your credit history.
Closing a card may initially worsen your CI due to a lower debt-to-credit ratio. For example, you have three credit cards of 20,000 rubles each, you close one, and then your limit drops to 40,000 rubles, and the debt on the two remaining cards remains. For a credit history, it is undesirable to close a card, it is better to pay off the debt on it and set aside.
Closing a card is quite the right decision if you have clearly reached an overspending on it. But it is best not to close several cards in a short period of time.
If your CI is still spoiled, and you need money urgently – you can always get a loan with a bad credit history in our company.