What are the most common misconceptions about bad credit?

Personal finance is a topic that we should all be educated on as it affects us directly. But we get that it can be complex – even boring (or scary).

As a result, too many people just ignore their perusal finances and hope for the best. Sometimes they are lucky and this approach works out for them. But others can pay a big price for this approach.

The problem is that ignoring the issue could make it worse or, at the very least, not improve your situation. This is why it’s important to learn about personal finance so you can make any necessary changes in your life.

Three common misconceptions about bad credit

Bad credit is often misunderstood, but it can cause many problems. Read on to discover three of the major misconceptions about bad credit that, once you know about them, you can do something about. 

1) Bad credit defines your worth

Most of the ideas on this list will be practical ones, but it’s definitely important to say that having a bad credit score does not define your worth as a person.

It’s true that it’s important to help you move forward, but there are so many options to help people with bad credit that it should never be something that causes you huge distress. Learn about how to deal with bad credit, and you’ll feel much better and be able to be more proactive

2) Bad credit means you’ll never be approved for loans

You might assume that if you had bad credit, you would find it impossible ever to be approved for any kind of borrowing. After all, it is likely to be your issues with borrowing that caused the bad credit in the first place. 

The fact is that lenders will certainly be wary, but that doesn’t mean no one will lend to you. It will be harder to get credit, but there are specialists who can help you, and that could mean you can access consolidation loans to make repayments easier, or even mortgages.

Getting a mortgage with bad credit might have felt like an impossible dream, but there are options for you. The first thing to do is take stock of your situation and determine whether you might be eligible for a mortgage and, if so, how much. Then speak to experts to work out all the details. You could be a homeowner even with bad credit, so it’s worth asking the question.

3) Bad credit can’t be improved 

It’s very important to understand that just because you have bad credit, that doesn’t mean you can’t improve your situation. It might take some time and some serious thinking and planning, but credit scores can certainly be improved, and someone who has bad credit can end up with exceptional credit if they work hard.

There are a number of things you can do to help improve your credit. One is to pay all your bills on time, every time. The next is to reduce your debt as much as possible, paying more than the minimum amount whenever you can.

It’s good to save up, especially if you want to buy a house as we mentioned above, but you’ll have a better credit score if you put your money into paying off your debts more quickly, and you’ll have more money available for a mortgage because you’ll no longer be paying your debts off.