Monday, 24 February 2014

What Doesn't Affect your Credit Score

Many different aspects of your financial history affect your credit report, and it is even affected by a lack of credit in the past. Moving house, changing jobs, taking out credit and even those you share accounts with can all affect your credit score, so it is important to be extra careful with your financial footprints when making decisions about credit and your money. There are some things however, that many assume has a bearing on their credit score, but in fact they don’t. Here are a few myths about your credit rating explained:

Who you live with

Who you live with historically had a bearing on your credit rating, as it was once calculated on your address, and address history, rather than on you as an individual. Now, the only people who are taken into account for your credit score are you, and anyone you have financial ties with. For example, if you have a joint current account with someone, or jointly own a business, then his or her credit will be taken into account with yours, but not just for sharing a home.

Running insurance quotes

When insurance renewals roll round you are best advised to run as many insurance quotes as possible in order to get the best deals. Whilst insurance companies and comparison sites do check your credit as part of their search, this check does not affect your credit rating. You will be able to see that these have been done on your credit file, but creditors will not, and it has no bearing on your score or ability to get credit.

Checking your credit rating

Whilst most credit checks will show on your file, and too many in a short period can have an adverse effect and show you as credit hungry, the same is not true for personal checks. You can check your own credit score at any time, without it counting as a check on your rating. If a company is offering you a credit checking facility but doesn’t inform you that it won’t adversely affect your credit score, then it is most likely one of the credit cleaner scams, as opposed to a legitimate credit reporting company.

Applying for credit (sometimes)

Most of the time, applying for credit will show on your credit file, and doing this too many times in a short period will affect your chances of being approved. Some credit card and loan companies now offer “pre-checks” to try and combat this issue, so they can give you an idea of whether you will be approved, before you go and run the full check and leave a mark on your credit file. These checks are not definitive, but do give a good indication, so are great for those with worries about their score.
Companies legally have to let you know if checks they are running will show or affect your credit score, before they run them. Always read the small print, and make sure you only run checks that are absolutely necessary, and if applying for credit, only do so if you believe you have some chance of success. Check your credit report often, as checks on your file that you are unaware of are a good indicator of fraud in your name.

Bill Turner is a freelance writer and animal rights activist. He enjoys spending most of his time in nature with his dogs and travelling the world with his family.

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