Common Credit Myths Debunked—What You Need to Know

Hi, it’s Michael Sherriff here with another edition of UK Credit Secrets. Today, we’re diving into some of the most common credit myths that might be holding you back from improving your score.

There’s a lot of misinformation out there, so let’s set the record straight and help you focus on what really matters.

Tip of the Week: Myth-Busting—Checking Your Own Credit Score

Myth: Checking your own credit score will hurt it.

Fact: This is one of the most persistent myths out there, but it’s simply not true. When you check your own credit score, it results in what’s called a “soft search” or “soft inquiry,” which has no impact on your score.

Here’s what you should do:

1. Regularly Check Your Score: Use free services like Experian, ClearScore, or Credit Karma to check your score as often as you like without worrying about any negative effects.

2. Monitor Your Progress: Regular checks allow you to see how your actions are affecting your score, so you can adjust your strategy as needed.

Don’t let this myth stop you from staying informed about your credit health!

Main Article: Common Credit Myths Debunked—What You Need to Know

When it comes to credit, misinformation can do more harm than good. Let’s debunk some of the most common myths so you can make better decisions for your financial future:

1. Myth #1: Closing Old Credit Accounts Will Improve Your Score
   Fact: Closing old accounts can actually hurt your score by reducing your available credit and shortening your credit history. It’s usually better to keep old accounts open, especially if they have no annual fees.

2. Myth #2: You Only Have One Credit Score
   Fact: You actually have multiple credit scores depending on the credit reference agency and the scoring model used. Lenders might see different scores from Experian, Equifax, or TransUnion.

3. Myth #3: Your Income Affects Your Credit Score
   Fact: Your income isn’t included in your credit report and doesn’t directly impact your credit score. Lenders consider your income separately when evaluating your creditworthiness.

4. Myth #4: Paying Off a Debt Removes It from Your Credit Report
   Fact: Even after paying off a debt, the account will remain on your credit report for up to six years. However, it will be marked as “settled” or “paid in full,” which is better for your score than leaving it unpaid.

5. Myth #5: Using a Credit Card Always Leads to Debt
   Fact: Credit cards can be a powerful tool for building your credit when used responsibly. If you pay off the full balance each month, you can avoid interest charges and improve your credit score.

By debunking these myths, you can focus on strategies that truly make a difference in your credit score.

Tool Spotlight: Credit Education Resources

Understanding credit is key to managing it effectively. Here are some excellent free resources to help you deepen your knowledge:

1. MoneyHelper:
   A government-backed service offering free and impartial advice on money, including credit and debt management.

2. Citizens Advice:
   Provides free guidance on managing debt and understanding your rights when it comes to credit.

3. StepChange:
   A debt charity offering free advice and practical solutions for those struggling with debt, including how it affects your credit score.

These resources can provide valuable information and support as you work to improve your credit.

What’s Next?

In the next edition, we’ll be exploring the power of on-time payments and how they can significantly impact your credit score. Don’t miss “The Power of On-Time Payments: How It Impacts Your Credit.”

As always, if you have any questions or thoughts, just hit reply. I’m here to help you every step of the way.

Cheers,
Michael Sherriff
Founder, UK Credit Secrets