Are you considering taking out a loan but are unsure due to common myths? Let’s debunk some prevalent misconceptions surrounding loans and credit cards, empowering you to make informed decisions.
APR representation
The APR displayed alongside a loan is often misunderstood. It is a representative rate, offered to just over half of applicants. The actual APR depends on individual financial situations and forms part of the loan agreements alongside the loan amount and repayment terms. More information on loan agreements can easily be found online.
Credit score impact
The belief that taking out a loan damages your credit score is a common misconception. While a ‘hard’ search is added to your credit report when you apply for credit, responsible loan management can positively impact your credit score over time. Don’t let a temporary dip discourage you; instead, view it as an opportunity to showcase your financial responsibility.
Multiple applications
Submitting numerous loan applications randomly is not a wise strategy. Each application adds a ‘hard’ search to your credit report, potentially lowering your credit score. Check your eligibility before applying to gauge the likelihood of approval, ensuring a more strategic and responsible approach to credit applications.
Credit score requirements
Contrary to the belief that a high credit score is a prerequisite for getting a loan, there are options for individuals with lower credit scores. ‘Bad’ credit loans cater specifically to those with less-than-perfect credit. While these loans may have higher interest rates, they provide a valuable opportunity for individuals seeking financial support. To find out more about credit scores, click here.
A positive step
Taking out a loan can be a positive step for your credit score if done responsibly. By dispelling these myths, we aim to empower you to navigate the world of loans with confidence.
