What is my credit score?
How is my credit score used ?
In Australia your credit score is used by lenders and credit providers as part of their overall process in determining if you are considered an acceptable risk. Remember that it is only part of the process.
Naturally the higher your credit score, the lower risk you are considered.
But having a high credit score alone is not the only determining factor when a lender decides to approve or decline your finance application.
How is my credit score calculated?
Credit reporting bureaus in Australia compose your credit report based on many different pieces of information. Their data bases gather all of the information you have submitted in loan applications over the past, as well as from certain public data bases.
Try to think of the data base giving you a tick for good aspects and a cross for bad aspects. At the end of the overall calculation the data base gives you a score based on the number of credits or ticks you have accrued.
What is good for my credit score?
So a credit reporting bureau such as Equifax or Experian give you credits for good aspects which go towards a good credit score. Here are some good aspects of a credit file which would contribute towards a higher credit score.
- stability and long term in both residential address and employment history. This shows you are somewhat stable in character, to a computer algorithm anyway.
- Age. The older you are to a degree, the more stable your character is considered. The same goes with being single or having a partner, single people pose more risk.
- Gender. And example would be young males are considered higher risk than older females.
- Loan or credit applications with major and reputable lenders. These applications are considered acceptable on your credit history.
- Limited number of applications for finance or credit. Not too many applications shows that you are not desperate or carefree when is comes to needing finance or credit.
What is bad for my credit score?
- Not paying your bills on time. This can lead to payments defaults being listed or even court judgments, both of which severely impact your credit score.
- Too many applications for finance. This makes you appear desperate for finance and also worries lenders why you have been decline elsewhere before going to them.
- Type of applications. Applications for “fast money” type loans of “payday loans” are considered to be somewhat desperate and subsequently lower your credit score. Even credit cards applications are not good apart from one every few years.
How do I improve my credit score?
There are several ways you can improve your credit score.
- Firstly tidy up any inconsistent information on your credit file such as incorrect address data, incorrect spelling of your name and any other inconsistent data which may be conflicting with what you would normally place on a finance application. Your credit file must match what you fill out on an application.
- Secondly address any type of defaults or court actions. You can dispute these with the credit provider or you can hire a professional credit repair solicitor. Some entries are removable under certain circumstances and it is definitely worth investigating as opposed to doing nothing.
- Thirdly make sure you do not apply for any more fast money or payday loans. This impact your score highly. Overnight improvement does not happen in this area and will take a year or two.
How do I protect my credit score?
Make sure you are vigilant with the sharing of your personal details.
Avoid online applications where you enter your personal details in less than reputable websites.
Never give your financial details to anyone except on applications or debit requests.
Request a copy of your credit file regularly and check it out! Access your current credit score by clicking here.