Being a taboo subject,
debt has accumulated a few myths that perpetuate both fear and reckless spending. Knowing the truth about debt and how it influences your credit report, marriage and loans can help you to avoid falling into the debt trap.
Myth: Once I’ve been blacklisted, my credit is destroyed forever.
Fact: You can rebuild your credit score and your credit history. It takes a while, but it is worth it. You can do this by paying your existing debt on time, looking for better credit options and managing your money better.
Myth: Once a debt has been paid off, it’s removed from my credit report.
Fact: Once debt has been paid off it remains in your credit report or credit history for prescribed time. Past debts are a good indication of debt behaviour for current creditors.
Myth: If I co-sign a loan for a friend, it won’t affect my credit rating.
Fact: Co-signing a loan bears the same consequences of taking out a loan for yourself. Your friend is primarily responsible for the loan, but any defaulted payments will be collected from you. This is a serious favour and should be considered carefully.
Myth: The information on my credit report is unchangeable.
Fact: The National Credit Act stipulates that information on the credit report must be accurate. If there are any inaccuracies, these can and should be rectified.
Myth: If I get divorced, I’ll get half my spouses debt.
Fact: The debt is collected from the account holder. If the account is in your spouse’s name, he or she is responsible for the payment. If there is debt on a joint account, any defaulted payments on the part of your spouse, will be collected from you, as if you co-signed the credit.