It’s a myth! Misconceptions about credit hindering people’s financial health

73% of people still falsely believe a credit blacklist exists, while 1 in 4 incorrectly think credit reference agencies make lending decisions for credit cards. Experian launches Credit Awareness Week to help more people take control of their credit history and wider financial situation.

UK, March 21 2022: New research1 from Experian reveals myths and misconceptions about credit information could be holding people back from improving their financial health. 

Nearly three quarters of people (73%) falsely believe a credit blacklist exists, and over 1 in 4 (27%) people incorrectly think credit reference agencies decide whether people are accepted for credit cards. 

People are also unfamiliar with factors that impact their credit score, with some respondents incorrectly believing that checking your own credit report (14%) and a previous occupant of their address with a poor credit history (34%) can negatively impact it. 

The findings have been released as part of Credit Awareness Week 2022 – an industry-wide initiative which aims to encourage more people to engage with their credit history and personal finances. This year’s event is especially significant, as more people begin to struggle financially against a backdrop of rising inflation and the strain of rising living costs. This follows the pandemic, which has tested the financial resilience of millions. 

The research shows we need to continue our mission to guide the public on credit scores and lending decisions. However, positive steps have been made over the past few years. When the survey was first conducted in 2017, 80% thought a credit blacklist existed and 32% thought a credit reference agency decided the outcome of a credit card application.  

Jose Luiz Rossi, Managing Director of Experian UK&I, comments: “Although the UK is a very well-educated population, there are still a lot of people who lack confidence when it comes to managing their finances, and credit is a key part of that.  

“As we emerge from the pandemic, with a cost-of-living crisis confronting us, credit education has never been more important. Especially when you look at the results of our consumer poll and see, for example, 73% of respondents thinking there is a mysterious ‘credit blacklist’ that prevents them from getting credit. We have a duty to dispel these myths and promote consumer confidence with credit.”  

To mark this year’s Credit Awareness Week, we have created some exciting new educational content that aims to improve public awareness and understanding of the credit system, as well as providing useful tips and guidance to help people manage their money with confidence. This includes: 

To promote further understanding around credit reports and decisions, the comprehensive guide ‘Understanding your credit information and how lenders use it’2 is available online. The guide aims to empower people by helping them understand the type of information lenders use when processing a credit application and why, and what rights they have in relation to their credit information.

Open Banking can also help and is just one of the new innovative tools that can aide people who are experiencing financial exclusion and provide them with greater choice and access to more affordable credit, which Experian is championing.  

Six common credit myths: the truth about credit

1. There’s a credit blacklist 

Luckily there’s no such thing as a blacklist. Lenders make decisions based on the information on your credit report, your application form details and any account information they already have. If you do have a history of poor borrowing, then you could still be accepted but you’re likely to be offered lower credit limits and higher interest rates. 

2. Credit reference agencies make lending decisions 

 A credit reference agency provides information from your credit report for a lender to decide whether to accept or refuse your credit application. Other sources are also used, including information provided on the application form and information the lender may already have with you if you’re an existing customer. 

If you get refused credit, it’s best to ask the lender why, as only they know the reason. 

3. Being in a relationship links your finances 

Being in a relationship doesn’t mean your credit report, or finances, are linked together. The only way to link your credit reports is if you’ve applied for joint credit together in the past, for example for a bank account, loan, or mortgage. If you have previously taken out credit with someone, but don’t share any joint accounts now, you can ask for a financial disassociation with all the credit reference agencies. 

4. Previous house occupants affect your score 

This is a common myth, especially when people are living in rented accommodation. The previous occupants of your address do not have any impact on your finances or your credit report. There may still be letters that come to the address, so all you need to do is write on the front they don’t live there and stick them back in the post box.

5. Checking your credit report affects your score 

Checking your credit report doesn’t affect your score. It will show on your report as a soft search each time you check, but this is only seen by you and nobody else. You can check your Experian Credit Report and score as often as you like, which is usually a good idea before you apply for credit. 

6. I have one credit score 

There is no universal credit score. Each credit reference agency will give you a different score on a different scale. Of course, the higher this is with each agency the better. 

When you apply for credit, lenders don’t use this score. They use your credit report information, your application details and any recent history of previous accounts with them to calculate an overall score for you. It’s this final score that helps them decide whether to accept you or not, and sometimes what the rate will be. 

-ENDS- 

Notes to editors 

[1] This survey was conducted by YouGov Plc and involved 2050 UK consumers. Fieldwork was undertaken between 19th-20th January 2022.  

[2] ‘Understanding your credit information and how lenders use it’ 

Experian, Equifax and TransUnion have collectively updated the official guide to credit scoring – entitled “Understanding your credit information and how lenders use it.” 

The drafting process took on board industry body feedback, including from UK Finance, the FLA, lenders and consumer groups. In pulling together this updated guide, we want to empower consumers, helping them understand the types of information that lenders use at various stages of the lending process, how and why that information is used, and what rights consumers have in respect of their information. 

Media contact 

Joe Green, Senior PR Manager, Corporate & Business, UK&I, Experian 

Tel: 07812 737 768 / Email: joseph.green@experian.com  

About Experian 

Experian is the world’s leading global information services company. During life’s big moments – from buying a home or a car, to sending a child to college, to growing a business by connecting with new customers – we empower consumers and our clients to manage their data with confidence. We help individuals to take financial control and access financial services, businesses to make smarter decisions and thrive, lenders to lend more responsibly, and organisations to prevent identity fraud and crime. 

We have 20,000 people operating across 44 countries and every day we’re investing in new technologies, talented people, and innovation to help all our clients maximise every opportunity. We are listed on the London Stock Exchange (EXPN) and are a constituent of the FTSE 100 Index.  

Learn more at www.experianplc.com or visit our global content hub at our global news blog for the latest news and insights from the Group.