Your credit report explained Credit report myths busted

Your credit report plays a big part in determining whether or not you can access important financial products. Here we dispel some of the most common credit report myths. 

Myth 1: Having a poor credit history will put you on a credit blacklist

The credit blacklist is the unicorn of the financial world – everyone's heard of it, but it doesn't actually exist.
And there's no single 'score' that lenders use when deciding whether to let people borrow. 

Instead, lenders each use their own criteria to assess how risky a customer you're likely to be. This means it's possible that while one lender will reject you for a credit card or loan, another might accept you.

Myth 2: Credit reference agencies decide the outcome of credit applications

Credit reference agencies simply supply data to lenders who use this information to assess your application. As well as credit reference agency data, lenders will take into account any existing information they might hold about you, along with the details that you’ve submitted in your application.

Myth 3: You’re more likely to be accepted for credit if you’ve never borrowed

When assessing your application, lenders look for evidence that you'll be able to pay back what you borrow, so not having any record of successful repayments can count against you, even if you’re in rude financial health.

If you've never used credit, and this is preventing you obtaining it now, you might wish to consider applying for a credit builder credit card.

The Which? Money Compare comparison tables let you search hundreds of credit cards to help you choose the most suitable deal for you based on quality of service as well as cost and benefits.

Myth 4: Your credit report retains details of missed payments indefinitely

Many of the facts featured in your credit report will be removed after a certain period of time. Account data, including late or missed payments, remains on your report for up to six years after the account has been settled or defaulted.

But it's worth remembering that lenders are less likely to rely on older data, so a missed payment from a few years ago is unlikely to have a big impact.

Myth 5: All credit reference agencies hold the same information about you

There are three credit reference agencies in the UK: CallCredit, Equifax and Experian. Lenders should share information with all three (typically on a monthly cycle) but it's likely there'll be three slightly different 'versions' of your credit report.

This is largely because the amount of personal data in a credit report is growing, with some utility companies starting to share information about customer payment habits, but not necessarily to all agencies.

Myth 6: Checking your credit report too frequently will damage your credit rating

You'll never be penalised for checking your credit report, so you're free to look at any version as much as you like. In fact, it's a very good idea to check your report on a regular basis.

If there are any mistakes, for example, this could lead to you being unnecessarily rejected outright or paying over the odds to borrow. Checking your credit report can also alert you to any fraudulent activity. It's wise to check your credit report before applying for a credit card or mortgage.

Myth 7: Your credit rating is affected by the financial status of those you live with

Unless you have a 'financial connection' with someone – through a joint mortgage, for example – your credit rating won't be affected by anyone else's details.

But if you are financially linked with someone, lenders may look at their credit report as well as yours when assessing your application, as their circumstances could affect your ability to repay.  

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Which? Limited (registered in England and Wales number 00677665) is an Introducer Appointed Representative of Which? Financial Services Limited (registered in England and Wales number 07239342). Which? Financial Services Limited is authorised and regulated by the Financial Conduct Authority (FRN 527029). Which? Mortgage Advisers and Which? Money Compare are trading names of Which? Financial Services Limited. Registered office: 2 Marylebone Road, London NW1 4DF.