[cs_content][cs_section parallax=”false” style=”margin: 0px;padding: 0 0px;”][cs_row inner_container=”true” marginless_columns=”false” style=”margin: 0px auto;padding: 0px;”][cs_column fade=”false” fade_animation=”in” fade_animation_offset=”45px” fade_duration=”750″ type=”1/1″ style=”padding: 0px;”][cs_text]Now don’t get any ideas, I’m talking about your credit score!
If you have ever come across the term ‘Credit Score’ or ‘Credit Report’ and wondered what the heck that is all about then you are not alone!
Here are some insights into what it is and how it can affect your application for a loan in the future.
[/cs_text][/cs_column][/cs_row][/cs_section][cs_section bg_color=”#252525″ parallax=”false” style=”margin: 0px;padding: 0 0px;”][cs_row inner_container=”true” marginless_columns=”false” style=”margin: 0px auto;padding: 0px;”][cs_column fade=”false” fade_animation=”in” fade_animation_offset=”45px” fade_duration=”750″ type=”1/1″ style=”padding: 0px;”][x_custom_headline level=”h2″ looks_like=”h3″ accent=”false”]What is a Credit Score?[/x_custom_headline][cs_text]A credit score is a number which indicates to the banks how credit worthy you are (that is, how likely you are to repay the loan). A low credit score means that you are regarded as high risk, and can therefore be more likely to result in your loan application getting declined.
[/cs_text][/cs_column][/cs_row][/cs_section][cs_section parallax=”false” style=”margin: 0px;padding: 0 0px;”][cs_row inner_container=”true” marginless_columns=”false” style=”margin: 0px auto;padding: 0px;”][cs_column fade=”false” fade_animation=”in” fade_animation_offset=”45px” fade_duration=”750″ type=”1/1″ style=”padding: 0px;”][x_custom_headline level=”h2″ looks_like=”h3″ accent=”false”]Who decides my Credit Score?[/x_custom_headline][cs_text class=”cs-ta-left”]There are 3 main reporting agencies in Australia:
Dun and Bradstreet (www.checkyourcredit.com.au)
Experian Australia Credit Services (www.experian.com.au)
Veda (www.veda.com.au)
If you’d like to know your credit score, you are entitled to obtain one free copy of your credit report per year from each of these agencies. You can also receive a free credit report if a loan application was declined in the last 3 months.
You can also go to www.getcreditscore.com.au to get your score for free.
[/cs_text][/cs_column][/cs_row][/cs_section][cs_section bg_color=”#252525″ parallax=”false” style=”margin: 0px;padding: 0 0px;”][cs_row inner_container=”true” marginless_columns=”false” style=”margin: 0px auto;padding: 0px;”][cs_column fade=”false” fade_animation=”in” fade_animation_offset=”45px” fade_duration=”750″ type=”1/1″ style=”padding: 0px;”][x_custom_headline level=”h2″ looks_like=”h3″ accent=”false” style=”color: rgb(255, 140, 0);”]What is included in the report?[/x_custom_headline][cs_text]
- Your name, gender, date of birth
- Your current and two previous addresses
- Your current (or last known) employer
- Your drivers licence number
- Any defaults
- Bankruptcies
- Business names held
- Details of enquiries on your credit file (provider, service applied for, amount)
- Listing of all accounts you currently hold (car loans, credit cards, mortgages, Utlities, Telco, etc)
- Overdue bills more than 60 days overdue of more than $150
Important note: New laws were introduced in 2014 which will allow further information to be visible on your credit file such as 2 years of repayment history. This can be bad news for those who don’t pay their bills on time, but is good if you have had a problem in the past but now pay your bills on time as you can demonstrate your improved account activity. Another reason why paying your bills by direct debit can be a helpful money management tool![/cs_text][/cs_column][/cs_row][/cs_section][cs_section parallax=”false” style=”margin: 0px;padding: 0 0px;”][cs_row inner_container=”true” marginless_columns=”false” style=”margin: 0px auto;padding: 0px;”][cs_column fade=”false” fade_animation=”in” fade_animation_offset=”45px” fade_duration=”750″ type=”1/1″ style=”padding: 0px;”][x_custom_headline level=”h2″ looks_like=”h3″ accent=”false” style=”color: rgb(255, 140, 0);”]How is my score decided?[/x_custom_headline][cs_text]Each rating agency will have their own formula but here is a rough guide.Things that can have a positive impact on your score:
- How long you have had a credit file – the longer, the better
- Positive repayment history and lack of adverse reports is a good thing
- Time between loan applications – the less often you apply for a loan, the better
Things that can have a negative impact on your score:
- Multiple loan applications in a short space of time (e.g. shopping for a credit card).
- How often and how recently you applied for a loan
- Defaults and bankruptcy
- Overdue bills
[/cs_text][/cs_column][/cs_row][/cs_section][cs_section bg_color=”#252525″ parallax=”false” style=”margin: 0px;padding: 25px 0px 0;”][cs_row inner_container=”true” marginless_columns=”false” style=”margin: 0px auto;padding: 0px;”][cs_column fade=”false” fade_animation=”in” fade_animation_offset=”45px” fade_duration=”750″ type=”1/1″ style=”padding: 0px;”][x_custom_headline level=”h2″ looks_like=”h3″ accent=”false”]How do I protect or Improve my Credit Score?[/x_custom_headline][cs_text] If your file and score aren’t great there are a few things you can do:
- Check your file every year for anything that is incorrect and get it fixed (you will need to contact the credit agency to do this)
- If you are having trouble paying your loans or bills don’t wait until it is too late! Contact your bank or service provider and arrange an alternative payment plan until you get back on your feet
- Don’t apply for credit that you don’t need (like multiple credit cards!) and generally try to apply for credit with reputable lenders (i.e. avoid payday lenders!)
- Try to pay your debts and bills on time as often as possible, if not all the time. Things you might not suspect, like your phone bill, also count towards your credit score.
- If you have any defaults then make sure that they are paid as soon as possible and make sure that the payment is recorded on your credit report
- If you have a poor history but are on top of your finances now, you can contact a broker to help you find a bank that doesn’t use credit scores
[/cs_text][/cs_column][/cs_row][/cs_section][cs_section parallax=”false” style=”margin: 0px;padding: 45px 0px;”][cs_row inner_container=”true” marginless_columns=”false” style=”margin: 0px auto;padding: 0px;”][cs_column fade=”false” fade_animation=”in” fade_animation_offset=”45px” fade_duration=”750″ type=”1/1″ style=”padding: 0px;”][x_custom_headline level=”h2″ looks_like=”h3″ accent=”false” style=”color: rgb(255, 140, 0);”]My loan was declined – what do I do?[/x_custom_headline][cs_text]The first step is not to panic!
- Contact the bank in the first instance and find out why it was declined. You should know that loan applications can be declined for any number of reasons, not just due to the credit check. For example, your income may not be sufficient for you to afford the loan or your circumstances may not fit lender policy.
- If the decline was due to your credit history, obtain a copy of your credit report from one of the 3 agencies (or even all 3!) and check that all the information on your report is correct. If you spot an error ask them to correct it.
- Instead of applying for another loan with another bank and risking further damaging your credit score, contact a mortgage broker. They can help you understand your borrowing capacity and find a lender to suit your needs.
[/cs_text][/cs_column][/cs_row][/cs_section][cs_section bg_color=”rgb(37, 37, 37)” parallax=”false” style=”margin: 0px;padding: 0 0px 25px;”][cs_row inner_container=”true” marginless_columns=”false” style=”margin: 0px auto;padding: 0px;”][cs_column fade=”false” fade_animation=”in” fade_animation_offset=”45px” fade_duration=”750″ type=”1/1″ style=”padding: 0px;”][x_custom_headline level=”h2″ looks_like=”h3″ accent=”false”]Submit a Question![/x_custom_headline][cs_text]Have a finance question you’d like answered? Why not drop me a line! Each week I would love to answer a question from the community. Click below to get in touch.[/cs_text][x_button size=”global” block=”false” circle=”false” icon_only=”false” href=”mailto:tash@womenwithcents.com.au” title=”” target=”” info=”none” info_place=”top” info_trigger=”hover” info_content=””]ASK TASH[/x_button][/cs_column][/cs_row][/cs_section][cs_section parallax=”false” style=”margin: 0px;padding: 25px 0px 0;”][cs_row inner_container=”true” marginless_columns=”false” style=”margin: 0px auto;padding: 0px;”][cs_column fade=”false” fade_animation=”in” fade_animation_offset=”45px” fade_duration=”750″ type=”1/1″ style=”padding: 0px;”][x_image type=”none” src=”http://www.womenwithcents.com.au/wp-content/uploads/2016/07/Email-photo.jpg” alt=”” link=”false” href=”#” title=”” target=”” info=”none” info_place=”top” info_trigger=”hover” info_content=””][/cs_column][/cs_row][/cs_section][cs_section parallax=”false” style=”margin: 0px;padding: 45px 0px;”][cs_row inner_container=”true” marginless_columns=”false” style=”margin: 0px auto;padding: 0px;”][cs_column fade=”false” fade_animation=”in” fade_animation_offset=”45px” fade_duration=”750″ type=”1/1″ style=”padding: 0px;”][cs_text style=”font-size:12px;”]The information provided by Women with Cents is general in nature. It doesn’t take into account your objectives, personal financial situation or needs. Think of it as educational material in which to help you make more-informed decisions. We recommend you obtain financial, tax and credit advice specific to your situation before making any investments or financial decisions.
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