Five myth busting facts for healthy credit

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From credit cards to utility bills, it’s a financial minefield that can confuse even the most organised saver.

Credit scores can be a mystery for would-be homeowners. Those with no credit cards and no debt are burdened by no credit history, whilst others have been burnt with late payments from long-forgotten store cards.

With so many misconceptions, it can be hard for house hunters to assess their mortgage eligibility before heading down that route. To help you better understand the process, we’ve pulled together the top five credit score myths for first time buyers.


A bad credit score last forever

Fact: Bad credit will only last forever if you continue to make bad financial decisions. If you do have a poor credit score, then making positive changes to your spending habits and taking steps to manage your money better will improve your credit score over time. Be patient, this isn’t a ‘get out of jail free card’ – repairing your score could take some time.


Bad credit takes years to build

Fact: A few months is more than enough time to ruin a good credit score! For example, not paying off your credit card debt for six months could cause your account to be ‘charged-off’, which means your account is closed for future use and is one of the worst things that can appear on your credit report.


Closing a credit card improves your credit score

Fact: Whilst it seems counterproductive, leaving a a credit account open can actually help your credit score, especially if the accounts are in good standing order and have no outstanding debts.


You need to go into debt to build a good credit score

Fact: Whilst you do need to use credit products to build a good credit score, you should never purposely create more debt that you can afford. Building good credit can be as simple as opening a credit card and charging a small amount each month, then paying it off before the due date.


You only need to check your credit if you're applying for a loan

Fact: You should check your credit periodically throughout the year. Monitoring your score helps to not only confirm that your credit is in good health, but also gives you a head-start on any improvements that could be made ahead of a loan or mortgage application.

Concerned about your credit? Speak to an Independant Financial Advisor who will provide you with useful advice on improving your finances.