Myths about credit scores

If you have researched bad credit mobile phones before deciding to take out a contract to secure one, you probably have come across plenty of myths, half-truths and just plain lies about credit scores, credit ratings, good and bad credit.

Even though you want to take out a bad credit mobile phone contract because of a bad credit score, it is imperative to understand how credit scores work. It may help you in the future.

Let’s look at a few common myths when it comes to good/bad credit and credit scoring.

Myth 1 – Address problems

Now we do need proof of residential address when securing a contract. Don’t worry if you are renting and the tenants who lived there previously were blacklisted. Your credit report is a link to you and not your residential address. We do need proof of address if you default on payments, however. Having an address you have lived at for some time also shows stability.

Myth 2- Past debts from a decade ago mean nothing

Nothing could be further from the truth. Past debts left unpaid remain on your record. Of course, we look at everything holistically, that is why we can offer bad credit mobile phones.

Myth 3 – A non-existent credit history inevitably means a contract quickly and easily

Not true! Creditors like to see that a person has a credit history before lending to them. Let’s be honest, you should be okay in this regard with your bad credit history!

Myth 4 – Blacklisted: I have no hope

Here is a little secret. There isn’t a blacklist. Lenders will look at your previous repayment records. We do take these things into account, but together with our suppliers offer mobile phones that are affordable and within your price range.

Myth 5 – You should never check your credit score

People often believe that checking their credit score is a bad thing. We advise that you check your credit score at least once a year. It is important to know where you stand. Once you get yourself out of bad debts, you can apply for a regular cell phone contract. If you are unsure of your credit score, get a free credit report here.

Myth 6 – Items you have bought on credit are for all lenders to see forever

So those things that you bought on credit that overextended your finance and led to your bad credit rating are for all lenders to see for the rest of your life. Well no, actually. Credit that you have taken out reflects for up to six years, both good credit – where you have paid an item off - and bad credit – where you have not. Even if you may eventually have a good credit score, it is imperative to continue buying on credit in the future to maintain a positive rating.

Myth 7 – Never repay your credit card in full.

Nothing could be further from the truth. Paying your credit card installment in full every month is a very good thing to do and will give you a positive credit score over time. Also, try to pay above the minimum payment.

Myth 8 – Not using your credit cards? Cancel them!

Although this might seem like a great idea, especially as a way to stop yourself being tempted to buy on credit, this actually can affect your credit score negatively. Rather keep them and not use them. This helps to show lenders that you have financial restraint when it comes to debt.