As much as it affects your Credit Card buying decision, your salary doesn’t show up on your credit report. Here are some other credit report myths busted.
Obtaining your Credit Score from a bureau like Experian or CIBIL may only need the tap of a button or click of a link, but what happens after that can get a little tricky and confusing for some. We’re talking about your credit report that you generate when you try to check your Credit Score.
Too many people are unclear about what information a credit report does or doesn’t contain. It is, however, worth noting that your credit report has a tremendous impact on your life, right from the house you’re able to afford to the car you’re driving.
In this article, we’ll help bust some of the most common myths that people harbour about credit reports.
A credit bureau decides the fate of your loan application:
A misconception that many hold is that since credit bureaus generate your credit report, they also determine if you would be getting a loan or Credit Card. Nothing could be further from the truth. Credit bureaus only provide lenders with credit information that they require about you to process your application. Based on the information that they get from credit bureaus and the information that they have about you, lenders decide the fate of your application.
A good credit history means that you’ve never borrowed:
Several people have a tendency to think that lenders deem you credit-worthy if you have no credit history. This is inaccurate. In fact, having some history of borrowing actually helps since lenders can then easily assess your risk profile based on your repayment history. It becomes difficult for a lender to determine your creditworthiness in the absence of such information and they might even end up rejecting your loan application.
Additional Reading: How to Get Your Dream Credit Score Of 900 Points
Checking your credit report regularly will hurt your Credit Score:
Many people also tend to think that by frequently checking their credit report, they might end up pulling down their Credit Score. This is incorrect since checking your credit report frequently only results in a soft inquiry and has no effect on your Credit Score.
In fact, you should review your credit report every once in a while to check for any errors or inaccuracies that have the potential to put your credit profile at risk. While reviewing your report, do not disregard errors, including your name spelt incorrectly. Make sure you notify your credit bureau immediately and get them corrected. Checking your credit report thoroughly will also help you keep the incidence of fraudulent activity like identity theft at bay.
Your spouse and you will have a common credit report post marriage:
You may have a joint account with your spouse post your marriage, but your credit history remains separate and doesn’t merge with your spouse’s after marriage. In fact, your joint account or co-signed accounts will reflect in both your credit reports but it will also reflect your individual accounts.
Closing an account will remove it from your credit report:
One of the most popular misconceptions that people hold is that a closed account will not find mention on your credit report. This is incorrect because it depends entirely on the circumstances under which the account was closed. If the account had been settled or written off, then it is likely to remain on your credit report until the credit reporting time limit. If the closed account had a good standing at the time the account was closed, it will remain on your credit report as per the bureau’s guidelines that decide the reporting of closed, positive accounts.
Additional Reading: A Brief History of Credit Scores
You can hold off checking your credit report until you apply for credit:
One of the most crucial steps to take before applying for a Credit Card or Personal Loan or in fact, taking a financial decision of import is to check your credit report. Reviewing your credit report proactively gives you the advantage of identifying errors or signs of any fraudulent activity before you apply for a loan. This way you can address and dispute these errors with your credit bureau and eliminate chances of loan rejection because of them.
In fact, you should make it a point of checking your credit report at least once a month and see where you stand financially. Don’t worry, checking your credit report frequently will not pull down your Credit Score. It only acts as a soft inquiry.
All credit bureaus have the same information about borrowers:
Your credit report is a storehouse of information that includes a detailed history of your credit profile and Credit Cards or Personal Loans attached to your name. When you submit an application for a loan or Credit Card to a bank, the lender runs a check on your credit profile using the credit report it picks up from a credit bureau. This credit bureau could be one among many like Experian, CIBIL, and Equifax etc.
While essentially your credit report contained with all these bureaus is the same, there may be minor differences owing to differences in their accounting and reporting standards. However, these differences should not be confused with credit report errors. Regardless of which bureau your credit report is being sourced from, some details like your loan history, basic identification details like your name etc. should remain unchanged.
This is why it is imperative that you keep an eye on your credit report routinely to keep credit report errors at bay. It may seem like a small spelling mistake, but it can cost you big. Cases of identity theft or fraud is another thing commonly ailing credit reports.
Additional Reading: How Long Before Your Credit Score Starts To Improve?
Now that you’ve given this article a good read, it’s time to put those credit report myths to bed and begin reviewing your credit report more regularly. Get going in a jiffy by clicking the link below: