Introduction: Your credit score plays a crucial role in determining your ability to borrow money in Australia. Whether you're applying for a mortgage, car loan, or credit card, lenders use your credit report and score to assess your financial responsibility. Here’s everything you need to know about checking, understanding, and improving your credit score.
Key Points:
Checking Your Credit Score:
- There are three main credit reporting organisations in Australia: Equifax, Experian, and illion.
- You can access your credit report for free once every three months or if you've been denied credit recently. Additional requests may incur a fee.
- It's advisable to check reports from all three organisations for a comprehensive view of your credit status.
Contents of Your Credit Report:
- Apart from personal details like name, address, and employment history, your credit report includes information on current and past loans, repayment history, defaults, bankruptcies, and business debts if applicable.
- Your credit score, ranging typically from 0-1000 or 0-1200, summarizes your creditworthiness. A higher score indicates better credit management.
Understanding Credit Ratings:
- Credit scores are segmented into bands or ratings, from low to excellent. Lenders use these ratings to quickly assess your risk as a borrower.
- Higher scores (closer to 1000 or 1200) are favorable and increase your chances of securing loans at competitive rates.
Who Uses Your Credit Score:
- Lenders routinely request your credit report when you apply for credit products.
- Some employers may also check your credit report during background checks, especially for positions involving financial responsibility.
Improving Your Credit Score:
- Regularly review your credit report for accuracy and dispute any errors promptly.
- Maintain a positive repayment history by paying bills and loans on time.
- Consider reducing credit card limits and limiting new credit applications to improve your credit score over time.