Credit rating myths

We meet so many people who are extremely worried about their credit rating and quite often, this is completely unfounded. There are many misconceptions about what will and will not have an impact on your credit rating.

Here are some of the most common myths around a credit report.

Myth #1: “I always pay my bills on time so I don’t need to check my credit report”.

There are many people who mistakenly think that they have a clean credit rating but we always recommend that it is better to know this as a certainty rather than just making an assumption. It is highly advisable to check your credit report so that you can be certain that no errors have been made or worse, that you have been the victim of fraud or identity theft as this can impact on your credit rating.

Myth #2: “I will have to pay someone to fix my credit report”.

Fortunately, this is no longer the case. In the past, you may have needed help but the new credit reporting system has afforded new consumer rights and the result is a simpler process for you to get any errors corrected. You can get free help from a variety of sources including your credit provider, ombudsmen or community legal services.

Myth #3: “If I am late paying a bill, I will get a default on my credit report”.

Many people panic over simple late payments of bills but the reality is that only payments over 14 days will be recorded as “late payments” and these are considered to be a lot less serious than “defaults”. Further, late payments on a credit report can only be recorded for consumer credit products such as personal loans, mortgages, credit cards and other types of finance. It can never be for late payments on telecommunications and utility accounts.

A default is a more serious action than simply a “late payment” and it must meet certain criteria. This includes: being 60 days overdue, for a debt over $150 and where written notifications have been sent. This means, that you should know when you have a default.

Myth #4: “If I have too many credit enquiries, this can adversely affect my credit report”.

This is definitely a common misconception. Checking your credit report has no impact on your credit history. In fact, the reverse may be true where an enquiry has led to credit being granted and this can give any future provider a clearer picture of your current credit accounts.