Bad Credit Myths You Shouldn’t Believe

If you’ve been told you have bad credit, you might believe that a range of financial options are closed to you. From acquiring loans for bad credit, to debt consolidation, the idea of obtaining these can seem out of the question if you have a poor credit rating.

However, the reality is quite different. Here are some common myths we hear all too frequently:

01. "I’ve never borrowed, so I must have good credit"

Many believe they automatically have a good credit rating because they have no borrowing history and have never been in any kind of debt. Unfortunately, this is not the case.

A credit score for individuals is built up by a combination of factors but one of these is lending history. This provides prospective lenders with information on how likely the borrower is to adhere to the agreement and repay the finances provided to them. Therefore, some degree of lending – and repayment – needs to take place to start building a credit score.

02. "I must clear my debts to repay my bad credit history"

Although repaying your debts is a good move, making the repayments on existing debts is often a better way to improve bad credit. One of the worst things you can do to jeopardise a credit score would be to either be late with or miss the repayments.

Looking for loan places for bad credit may help you better manage your finances, by clearing your existing debts leaving you with one monthly manageable repayment.

03. "I must have bad credit due to having lots of debts"

Actually, this is quite the opposite. When repayments are made on existing debts – on time – the credit score on record is likely to be pretty good. To sustain this score, all you need to do is to keep paying each month.

04. "My credit score is poor, so I need a debt consolidation loan without a credit check"

No lender can offer you a loan without first completing a credit check. Credit checks help the lender to ensure that the repayments are affordable to you. Without completing these checks, the lender would be borrowing money irresponsibly and could find themselves being fined by the UK regulated.

Even with very poor credit, debt consolidation loans may still be available to you however, some lenders may require a guarantor to approve your application.