10 common credit score myths.

What not to believe about your credit score.

The credit industry in South Africa is often misunderstood. People tend to incorrectly assume that your score stays the same throughout time. Instead, your credit score changes over time based on a variety of factors.

1. Only credit providers can access credit reports

Every person is entitled to one free credit report per year. If you suspect there are potential errors on it you can log a dispute with the relevant credit bureau.

2. Income or cash in the bank will reflect on a credit report

This is another commonly held misconception. While your income may be an important factor when applying for credit, it is not information that reflects on your credit report or helps to improve your score.

3. Your qualifications and education level can affect your credit score

This is another commonly held misconception. Qualification levels do not affect your credit score.

4. Credit scores can be affected by gender, race or age

Questions about your religion, nationality and marital status are not an important part of the credit scoring process. These topics are only for statistical purposes or marketing research. The same rules apply to your score when it comes to day-to-day living questions.

5. Checking your own report will lower your credit score

This is a myth that probably originated in the early days of credit report compiling. Today, things have changed and you don't have to feel worried about being denied credit just because you or someone else has checked on your own credit report. It's referred to as a soft inquiry. We all know that everyone needs to have access to their available credit and an up to date credit report at all times so this misconception should be dispelled once and for all. When Credit Health conducts a credit report check for you, this will show as an inquiry on your credit report.

6. A poor credit score can not be improved or rectified

Improving your credit score takes time and effort, but it is possible. Your credit reports include your full financial history. This consists of a series of accounts that you have applied for over the years, your current open accounts and payments made to those accounts along with the maximum amount you have borrowed at any given point in time. Most credit providers include detailed information on each transaction made on each account, including payments, lapsed accounts, missed payments, and similar information. These details are essential when it comes to offering you products from various providers based on their own offerings.

7. A bad credit report means I cannot get any credit or loans

A low score or poor rating will make you ineligible for some types of loans and may prevent you from getting any new credit. This is the situation with some loans; it's different for others. To get past this, ask prospective lenders what you can do to improve your credit rating or read our articles related to improving your credit score

8. Closing credit cards or other accounts will improve my credit score

You need to have applied for, or have used, or are using some sort of credit, to start building your credit score. Without a verifiable financial history, you won’t get a good credit score. A low score or poor rating will make you ineligible for some types of loans and may prevent you from getting any new credit. You might be able to deposit cash or secure items as collateral or find someone who has good credit and has agreed to serve as surety on the loan if things go wrong. It is important to maintain a good balance between unsecured loans (credit cards, personal loans) and secure loans (vehicle finance and home loans) and to not miss any payments as missed payments will reflect on your credit report.

9. Credit bureaus decide whether you receive credit or not

The credit bureaus are responsible for keeping track of your credit history. They compile a report about you that is shown to potential creditors and people who may give you a loan or mortgage, and they use it as information to help those clients determine if they should trust you with their business.

10. Companies can fix a poor credit report for you

There are many companies that can assist in an advisory capacity, but they cannot fix or change anything on your report. Be very wary of any company that claims otherwise, because there is no way they can do so and it's practically never a good idea to pay for such a service. They can explain your report to you and help you understand what your credit score means and oftentimes also advise as to what they believe to be the best way to improve your credit score.

The credit score myths are pretty prevalent. The credit score is a very complex system, so it’s easy to see how people could get confused. Unfortunately, the confusion surrounding the credit score makes it even harder to figure out what you can do to improve your credit score. The best thing you can do is learn the facts so you can work on improving your credit score accordingly.