Lenders look at your credit score to evaluate the potential risk of loaning you money — or simply put, your creditworthiness.

Rumour has it that the higher your score, the more financially trustworthy you are. Now, this has a probability to be true, but what about the other data we’re not so sure of.

You have to weed through different information if you want to improve your credit score. First, let’s weed out fiction from facts and bust these credit score myths!

Myth 1: If you’re not getting a loan, no need to know or check your credit score

Other than lenders, your utility companies, potential employers, and landlord also check your credit score — although, they have to ask for your consent beforehand.

It’s better to know your credit score for contingency in case you need to get a loan.

There could also be errors and defaults which can be listed unknowingly. Change in residence can be a reason for credit providers to lose track of you and not able to give notification of any outstanding bill.

Check your credit file regularly for discrepancies and fix them at once.

You can also have a better chance at the lowest interest rate by knowing your credit score early on.

Myth 2: There’s an effect if you check it all the time

Checking your own credit report, known as a soft enquiry (informal), doesn’t go on your record and doesn’t affect your score.

It is recommended that you review your credit file often to verify it’s content and fix any errors.

Myth 3: Good income equates good credit score

You have as good a chance at having a good credit score as anybody, whether you have a high salary or otherwise. Same as if you’re on a higher income and still not able to do repayments on time — which very much affects your score.

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Myth 4: Good credit score stays good

Not paying your bills on time and not having credit at all can upset your good credit score.
Having a no credit report doesn’t always work for your loan application advantage. Lenders, based on your credit score, would want to know how you handle your repayments.

Although, after 5 years — 7 in case of a clearout, transactions vanish from your credit file. Bad and (even) good behaviour can disappear from your credit history, so you still have to be careful of getting bad credit.

Myth 5: You can’t get a loan if you have bad credit

The good news is there’s still a type of loan designed for those with bad credit.

With bad credit loans, the lender will assess your income and expenses to decide how much you can borrow — without credit checks.

Bad credit loans in Australia

In need of a financial boost this month — but you have a bad credit or no credit history at all?

You can find yourself without a substantial credit history for all sorts of reasons.

At Cigno, you can apply online for bad credit loans via their quick application.

In observance of Responsible Preliminary Assessment, Cigno may ask you for your personal data, which may include:

• bank statement
• drivers licence
• passport Number
• proof of age card
• birth certificate, etc.

Note: Bank accounts must be in your name and cannot be for online savings accounts or online only accounts.

Disclaimer: Please be aware that Cigno Loans’ articles do not replace advice from an accountant or financial advisor. All information provided is intended to be used as a guide only, as it does not take into account your personal financial situation or needs. If you require assistance, it is recommended that you consult a licensed financial or tax advisor.