Five Of The Most Common Bad Credit Myths

Bad Credit Loan Auckland

Have you ever missed a bill, or had unexpected expenses that have set you back financially for a few months? If your answer is yes, then you’re not alone. Many people in Auckland struggle to make ends meet with every paycheck, and have no safety net to fall back on should an emergency arise. Unfortunately, it doesn’t take long for your credit rating to become affected if you’ve defaulted on a few payments. Once your credit score has been impacted, it can take months – even years – to get back to a position of financial strength and get bad credit loan Auckland.

Your credit score is there to gauge if you’re a trustworthy payer and if there’s any risk in lending you money. However, there are so many myths surrounding credit scores that many people end up believing falsehoods. Here we’ll cover five of the most common myths to set you straight.

Myth 1: You Can’t Get A Loan With Bad Credit

This myth is believed because it seems relatively obvious. It makes sense to think that if you have a history of being a poor payer, you won’t be approved to take out any further loans in the future until your credit score has improved. This part is correct – banks may not accept your loan applications if your credit score proves that you don’t always pay on time, or at all. Even if your defaulted payments occurred many years ago and you since have held a steady job with a good salary, banks might only look at your credit score to make a decision.

Fortunately, there are credit loans available for people who can’t get a loan due to their credit score. These loans are called payday loans and cash advance loans, which are specifically designed for people who need access to extra finances in an emergency. In this situation, lenders will assess your income and expenses, to determine how much you can borrow, and what the repayments will be.

Myth 2: It Affects Your Chances Of Future Employment

This myth may be true in other countries; however, in Auckland, it’s not the case. A potential employer will not, and has no reason to check your credit rating. The only way an employer will need to see your credit score is if you’re applying to work in a financially sensitive position. Even in this case, they’re required to ask for your consent first. Without it, they can’t check your current credit score or your credit history. Needless to say, if you don’t provide consent, it doesn’t mean that you’ll be denied the position.

Myth 3: Your Credit Score Is Accessible By Anyone

This myth is entirely false. Due to it, many people believe that their credit ratings are stored in a server in a centralised database. In reality, your credit score depends on the firms which are asked. If you’re provided with credit, that company will store and keep track of your payment history with them. This information is centralised by a variety of other companies which provide credit, which use all the data available to assign you a credit score.

If you need credit, the party you’re borrowing from will more likely be looking at your credit history more than your score. They want to see your repayment habits, and if you have a good history of making repayments in full when necessary.

However, it isn’t uncommon for a banking establishment to base their decisions off your credit score and nothing else. In the end, a high credit score will tell a lender all they need to know – if you had a low credit score, they would look at your credit history to see why your score is so low. If it’s due to defaulted payments many years ago where your financial position has changed now, you shouldn’t have an issue with being approved for credit.

Myth 4: Your Bad Credit Cannot Be Changed

Many people give up when they get in a bad situation. There’s a misconception that even if your credit score can be changed for the better, it will only improve after many years. Unfortunately, there isn’t an overnight cure for bad credit loan Auckland, and you will need to make sincere efforts to improve it. However, it’s not true that bad credit scores stay with you forever without any hope of improving them.

As you deal with credit over time, your score adjusts as you go forwards. With every small loan or hire purchase that you repay in full and on time, your credit score improves. One solution is to take out a no credit check (or express) loan, which provides you with credit without checking your score. Here you can get financial assistance when you need it, and the chance to pay it back in due time to improve your credit rating.

If you have a bad credit score, it makes things difficult for you, but it isn’t forever. Start by taking credit on the smallest loans you can. This will make repayments more manageable (since it’s a small amount) and soon your ratings will improve.

Myth 5: Having Debt Is Bad For Your Credit Score

Millions of people around the world have debt, from house mortgages to buying items on hire purchase. Having debts on the name doesn’t mean that you’ll have a bad credit score. The only way you can get a poor rating is if your credit history proves that you’re in the habit of defaulting or short-paying the repayment instalments. As long as you manage your finances and make regular payments on time, you won’t have a problem. In fact, if you have multiple debts in your name – from buying or building a house or taking out a vehicle and a personal loan for example – and you’re able to manage them all effectively, it shows creditors and lenders that you’re a low credit risk, and would, therefore, improve your credit score over time.

Debt is a part of life that everyone has to deal with at some point, so you shouldn’t be afraid of it. As long as your debts are managed responsibly, you won’t have a problem.

A bad credit rating won’t do you any favours. However, everyone hits hard times and has struggled to pay for their loans at one point or another. If you have bad credit, you’re not alone, and this isn’t the end for you. By managing your finances responsibly, you can slowly improve your credit rating. If you’re in an emergency and need financial aid, you can apply for bad credit loans at various lenders in Auckland, and Cash Relief is one of them. We specialise in helping people who need financial assistance to solve a problem, or to get them on the right track. Contact Cash Relief today, to apply for payday and cash advance loans.