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Knowledge is power when it comes to getting the credit you want. Start by understanding the impact your credit history has on the type of offer you get – or whether you get an offer at all.

Your credit history is reflected in your credit report, which lists cards, loans, mortgages and other credit accounts, your repayment track record and information such as bad debts, IVAs and bankruptcies. Lenders use this, along with details from your application, to decide whether there’s a good chance that you’ll repay what you owe, so it’s crucial to understand what items will and won’t influence them. You can see your credit report for free with CreditExpert.

1. Previous occupants of my address affect my credit rating

It makes no difference if the previous occupant of your home was a millionaire or a bankrupt as long as you do not share a financial connection, such as a joint account. Lenders are only interested in your ability to repay them on time and in full. They do like to see stability, though, and if you’ve recently moved they will want to know your previous address, so they can check back.

2. Credit reference agencies make lending decisions

Credit reference agencies – Experian is the UK’s largest – compile and hold your credit report securely. They don’t make decisions. That’s up to lenders, who use the information in your report, along with items from your application, when they calculate your credit rating.

3. Past debts don’t count

Unfortunately, they do. Court judgments for non-payment of debts, IVAs and bankruptcies stay on your credit report for at least six years. Even a missed repayment is recorded for at least three years. Any of these could count against you, because lenders could think that you will miss payments with them too.

4. If you’ve never borrowed, you’ll get the best deals

If you’ve never borrowed, lenders have no way of predicting how reliable you’ll be in the future and may even reject you. Most of them would rather see a credit report showing a few well-managed loans or cards and regular repayments.

5. I could be on a blacklist

Blacklists don’t exist and your credit rating doesn’t take account of your race, ethnic origin, religion or gender. Factors lenders do consider include your repayment history and how much you already owe. They want to be sure that you aren’t taking on more credit that you can comfortably manage.

6. Friends and family living at my home affect my credit rating

Unless you share a financial connection with any of them – for example, a mortgage or joint credit card account – friends and family have no impact on your credit rating. If you do have a financial connection, lenders may look at their credit report as well as yours when you apply for new credit, as their circumstances could affect your ability to make repayments.

7. Repaying your credit cards in full depresses your credit score

Nonsense. In fact, you’re likely to get a better credit score, because it shows you can afford your borrowings. You’re more likely to get a lower score if you skip payments or make them late.

8. It doesn’t matter how many credit accounts you have

Lenders want to be sure that you can afford the credit they grant, so they prefer it if you don’t already owe large amounts on multiple accounts. They can also take into account the amount you could borrow against your credit limits, so it’s best to close down unused accounts and limit the number of new applications you make.

9. You only have one credit score

Each lender uses a unique method to calculate credit scores and some use a different formula for different products, such as loans and cards. So you could get three different credit scores if you made three applications in a single day. Your credit history and score also change as your circumstances change. For example, missing a few repayments could lower your score, while paying off a debt could give it a boost.

10. Items in your credit history stay on file forever

Your credit report is designed to give lenders a good picture of your recent and current position – they’re not interested in seeing that a 40-year-old missed a few repayments when he was 21, because it has no relevance to his likely behaviour today. Most information about your credit history is therefore held for between three and six years.

Check your Experian credit report online with a free trial of CreditExpert, the UK’s leading online credit monitoring and ID fraud protection service.