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Contents
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Still more about credit report myths
Misunderstandings about credit reports persist
In parts one and two of this article, we discussed some common misconceptions about credit scores and credit reports. In part three, we will continue to examine some common things that people misunderstand about a document that, while rarely seen, remains an important part of their lives.
Continued below
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Credit scores and reports aren’t that complicated
While most consumers regularly use credit cards and occasionally apply for new ones, most people do not often make big purchases that require extensive credit checks. As such, most people are in the dark about how the entire process of approving a customer for a loan works. Even worse, many people continue to have misconceptions about what goes on when someone is approved or denied when they apply for a loan.
Here are a few things that people frequently misunderstand:
- Lenders have a “blacklist” of unworthy applicants. If you are on it, you are out of luck - Not true, although it may appear that way to people who are frequently denied credit. Each lender or creditor has their own criteria for what constitutes acceptable risk when it comes to lending. Some companies are willing to take on more risk than others; they will be more likely to lend to someone with a spotty borrowing history. Others are more conservative. If you have been turned down for a loan, don’t assume that you’re on “the list.” Just find another lender and apply there. You may wish to check a copy of your credit report first; you can get one for free if you have recently been turned down for a loan. You may find errors on your report that may make your credit appear to be worse than it actually is.
- There are companies that can remove negative information from your financial record for a fee - Not true. There are certainly companies that claim that they can do that, but they cannot. The only way to get negative information removed is to either repay delinquent debts or to wait seven years for the information to naturally “fall off” the report. Do not be taken in by the numerous advertisements by companies that claim to be able to “fix” bad credit overnight. The only thing they can do overnight is take your money. If you want to fix your problems, you will have to do it yourself.
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- People who formerly lived at your address may affect your report - If the last people who lived at your address were deadbeats, you need not worry. Credit records are cataloged by Social Security numbers, not by street addresses. Your problems are your own, and the problems of the people who used to live at your address are their own.
- What about a former spouse? - Debts incurred jointly during a marriage can turn up on the reports of both parties. If you divorce, you are both still liable for the debts. So it is possible that a former spouse’s problems could turn up in your file, but only for those debts that you jointly incurred while married.
The process of maintaining a financial history is a complicated one, and most people only consult their own record when they have been turned down for a loan. For the most part, the system works well, and as long as the information is correct, the document paints a generally accurate portrait of a consumer’s ability to repay a loan.
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