Do you know the score when it comes to credit ratings?

Credit scores can be confusing. But it’s worth getting to know them better, as they could make all the difference when it comes to applying for deals such as mortgages, car loans, and mobile phone contracts.

For better or worse, your partner can affect your credit score. Photograph: PA

Credit report provider Noddle.co.uk put people’s financial skills to the test and found that 56 per cent couldn’t answer correctly when asked what a credit score is. Here the company’s Jacqueline Dewey debunks nine common myths.

Myth 1: Checking your credit score hurts it

It’s important to understand the difference between soft and hard credit searches. Checking your credit score is a soft credit search. This means that no matter how many times you check your score, it won’t have an impact. Hard credit searches leave a mark, but these are only carried out by lenders when you’ve applied for credit with them.

Myth 2: You only have one credit score

Your credit score may be different depending on which credit reference agency you use – as each have different criteria and methods for calculating a credit score.

Myth 3: You could end up on a credit blacklist

When you apply for credit, each lender assesses your application differently, so rejection from one doesn’t necessarily mean rejection from all. But it is important if you’re rejected, not to quickly make multiple credit applications. This can indicate to lenders that you are having problems, which may make them more reluctant to lend to you.

Myth 4: Your credit history stays with you forever

Financial accounts, credit cards and loans remain on your credit file for six years from the date that they have been settled and closed. This time-frame allows lenders to get a clear understanding of how you’ve managed your financial commitments in the past. After this time, they are automatically removed.

Myth 5: Your partner’s credit history definitely affects your credit score

Being in a relationship or living with someone else doesn’t mean they arbitrarily influence your credit rating. But your partner can affect your score – for better or worse – if there is a financial association, such as a joint bank account, mortgage or loan. If you are financially associated with someone else, it will appear on your credit report, which does mean they can affect your score. But if you no longer share finances with this person, you can ask credit reference agencies to remove them from your file.

Myth 6: The less credit,
the better your score

Lenders like to make informed decisions. If you have limited credit history, then lenders have insufficient financial information about past behaviour to use when making their decision. This may increase your chances of being refused credit. However, that doesn’t mean that spending a lot of money on credit is good for your score. It’s important to find a healthy balance.

Myth 7: A big salary
equals a better score

It’s more complicated than this. Someone with a high income or savings may still find it hard to get credit if they have a lot of debts or a history of missed payments. However, your salary or savings may form part of the overall criteria lenders use to decide whether to lend to you.