Debts are unpleasant and become complicated when you don’t know your rights and obligations. To avoid common mistakes, read on …


The world of credit and debt is a difficult one to get your head around, especially if you’ve rarely taken overall responsibility for your own finances in the past. This means that you might hear things that you take as gospel because you don’t know any better, but they provide a distorted perspective as far as your finances are concerned.

Read on for a few of the commonly-held myths about credit and finance in the UK and find out how much you actually know.

You can inherit debts
There is no law or practice, which means somebody else can become responsible for the debts of a deceased person. When a collector finds out that a borrower has died, they will contact the estate and make a claim to be paid out of the assets the deceased has left behind.

Your debts are written off if they haven’t been paid within six years
This myth stems from the 1980 Limitations Act, which specifies that a debt will become statute barred after six years if the person who owes the debt hasn’t made a payment or admitted a claim (and if a county court judgement hasn’t been secured against them).

However, while the Act can protect people from being forced to pay debts that have passed the time limit, the debt isn’t ‘wiped out’—it still exists, but the creditor cannot now force payment through the courts.

You can go to prison for not paying your debts
Contrary to popular belief, it’s not a criminal offence if you’re unable to pay debts— it is usually only the non-payment of government-enforced fees like television licenses, council taxes and magistrates’ fees that would lead to a custodial sentence. Even in cases involving non-payment of those fees, prison is only a last resort—there are various other measures that can be taken first.

Your credit report is checked when you apply for a new job
Certain professions, especially those that are based in finance such as accountancy, law and so on, may subject new hires to a credit check, but this is a relatively rare occurrence. If a company is going to run a credit check on a potential new hire, they are obligated to inform that person in advance.

You only have one credit score
Nobody in the UK has only one credit score. Each lender has its own way of rating customers, which is kept secret and can change for different products like credit cards and insurance. With this in mind, it’s possible for everyone to potentially have hundreds of credit scores. Rejection from one doesn’t necessarily mean rejection from all of them.

You are liable for old debts registered at your address
This was the case up until several years ago because credit checks would be run against an address, rather than the individual who lived there. These days, the checks are run against individuals so any old debts that might have been registered at your address will not affect you in any way, unless you happened to have a financial connection (such as a joint account) to any previous occupants.

You should steer clear of credit cards if you’re having debt problems
While you certainly don’t want to continue overspending to cover the problems you’re having, one of the most effective ways of building or rebuilding a credit history is by spending on and paying off credit cards in full, on time and on a regular basis. This helps lenders identify you as a trustworthy person who can be relied upon to stay on top of debts that might be incurred.

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