If you have bad credit, lenders are less likely to offer you favorable terms because they don’t trust you. Obviously, it’s not ideal to have bad credit, as it can bring complications to your life. However, there are so many misconceptions and myths about having bad credit that spread false information. Here are some of the most common and frequently believed myths, busted!
Myth #1. Bad credit is permanent
Nope! Luckily, this is wrong on so many levels. The most worrying part of this myth is that it assumes that good credit is also permanent. Your credit score is constantly changing based on your financial habits.
Some people end up with bad credit because of a specific event or bad habits in the past. But, if you practice good financial habits, you can raise your credit score right to the top. Bad credit is only as permanent as you make it!
Myth #2. Applying for a loan gives you a bad credit score
This myth isn’t technically true, but it is based on some facts. Applying for loans or other forms of credit can impact your score and drop it a little bit. However, it doesn’t automatically mean you’re given a poor credit score! You can pay off the loan to build up your credit rating by showing that you can pay things on time.
Myth #3. You can’t apply for anything if you have bad credit
Again, this is a myth based on a misunderstanding of the truth. If you have a bad credit score, it will be hard to apply for other sources of credit. Getting a mortgage can be hard, applying for a credit card may be a challenge.
You will often get approved by lenders, though the terms you receive are less favorable than if you had a better credit score. Likewise, most secure forms of credit are accessible when you have a bad score. You can get things like online title loans with no store visit even if your credit is poor.
Why? Because secured loans regularly use something you own as collateral. In the instance of title loans, you have your car title as a surety for the lender to cling to. If you failed to pay your debts, they can secure your car, so the risks are lowered.
Myth #4. Student debt is on your credit report
Many young people are worried that their credit score is negatively affected by student debt lingering for many years. The good news is that student loans will not be on your credit report. So, they don’t have an impact on your rating at all. If you have bad credit, you don’t need to focus on your student loan to boost your score.
Hopefully, this post has shown some of the common myths that you may have fallen for in the past. It’s good to know about credit score, as it makes you more financially knowledgeable. Credit Sesame can help you with that!