Myths Affect On Your Credit -5

Continued from previous article..
The first myth is perhaps the most damaging. Credit card
companies will and do give credit cards to people who can’t
afford to pay the debt on them.

No one can depend on a lender to keep a buyer's spending within safe
and reasonable limits. The lender has no idea about your spending
habits since that information doesn’t directly appear on your credit
report. If you rent your home, that payment likely doesn’t show up on
your report. Likewise your food bill, entertainment expenses and
utilities don’t appear anywhere on that report. The lender only knows
the income you state on your application, and your debts which appear
on your credit report. Thus when credit is extended, it may not always
be in your best interest to use it.

Notice that most of the credit mythology relates to credit card use.
We’ll talk more about credit cards, exploding the myths and telling you
how to use cards properly, in the article Pick a Card, Any Card: The
Deal with Credit Cards.

Denial is not just a river in Egypt...
Sometimes your credit card applications will be denied. Credit will
usually be extended as long as a borrower has shown the ability to
repay in the past. Our credit system ensures that these borrowers will
be allowed to continue buying, even after they can no longer afford the
payments on their debt. Creditors, after all, are in the business of
lending, not rejecting applications! Despite this, once bad credit habits
start appearing on your credit report, lenders will deny your
application.