With more Brits enquiring about applying for credit over the past 12 months, a new study by car finance experts, Zuto aims to debunk some of the most common myths that the nation has when it comes to finance and credit.
The report reveals the financial fiction Brits fall victim to, who we turn to for advice, along with the jargon that we find the most confusing, whilst providing information to those in need.
The credit myths that Brits believe the most
Over three in 10 (32 per cent) admit to thinking that it’s smarter to buy a house than rent, making it the biggest financial misconception. Joining the property ladder can most certainly be right for some, but that does not mean it will be the best decision for all, with many factors such as the current market, your financial situation, and personal preferences coming into play.
Looking at more credit-specific tales, 22 per cent believe there is a credit blacklist whilst one in five (21 per cent) think that every credit search on an application will impact your score. Put simply, a soft search provides an overview of your eligibility to the lender and will not influence your score, whereas a hard search looks further at your record and may temporarily impact your score.
Other common myths include the false belief that your partner having a bad credit file will impact you (16 per cent), that checking your credit report will affect your score, and that credit itself is a bad thing to have (10 per cent).
Where the nation turns for financial advice
Perhaps unsurprisingly, Brits are most likely (32 per cent) to turn to the internet when it comes to financial advice or seek out help from friends and family (26 per cent).
When it comes to splitting the research by gender and age, women are much less likely to seek out finance advice (31 per cent) compared to men (19 per cent), with Gen X (16-24) being the least interested, respectively (10 per cent).
The financial jargon we find the most confusing
As part of the research, Brits were asked to reveal the terms they understand the most, with overdraft, loan, mortgage, credit score, and pension being the most popular.
Annual equivalent rate (AER), annuity, compound interest, collateral, and arrangement fee were found to be those that Brits need more clarity on, as more than one in five (21 per cent) millennials (25-44) highlight they didn’t understand the meaning of any of the 18 financial terms included.
Commenting on the research, Lucy Sherliker, head of customer at Zuto says: “Busting financial myths is really important, especially for those who are considering taking out credit. When it comes to making enquiries, it’s important to go directly to the source, as they will provide you with the most accurate information related to your needs.
At Zuto, we specialise in helping people secure credit no matter what their score is. If you have a low credit rating, you can still apply for car finance with us, without it negatively impacting your report.”