How do life events affect my credit score? Whiteboard Wednesday

Hi, welcome to Whiteboard Wednesday. I’m Paul Walshe, founder and CEO of Fair Go Finance.So today’s session is around our life events and how they can impact your credit score and how you can protect your credit score.

What is a credit score?

So quick refresh on credit scores: they’re a score that a credit bureau will calculate based on the information they’ve collected from credit providers.  That information comes from a lender or bank or a retail outlet or a utility provider or mobile phone provider who shares their data about you with the credit bureau.

So that score reflects a level of risk around you as a borrower and impacts your access to credit and the price you pay for that credit.

How do life events affect my credit score?

So as you move through life, we make different decisions and we each go through life’s journey and with that comes a credit journey.  So when you move out of home, for example, or you’re finishing school or you going to be looking to get a mobile phone – well that telecommunication provider will share that data with your credit bureau.  Similarly for a credit card to buy tools when you start a job, a car loan to buy a car to get to and from work, utility providers when you sign up for utilities when you’ve moved in with friends or on your own; and similarly when you go to then buy a house, with a partner, be that for a residential property or investment property, that data is shared with the credit bureau.

So for each credit decision that lender will access your credit file and see your payment history and your performance on those previous contracts and they’ll use that information to give you a decision around an application for a personal loan or a car loan in the future.

So those life events and how you handle those and how you manage those and how you behave in those contracts with credit providers determines your credit score.

So how can I protect my credit score at these times?

So as a personal loan provider, we’ve lent money to a lot of people and we’ve seen some tips that we wanted to pass on that we think could help people protect their credit score.

Some of these start with individual and with yourself, so having some basic habits around budgeting and having some savings in the bank so that when unexpected events occur you do have some savings to draw on.

Beyond that, some other tips that we think have been very beneficial to the customers are 1) checking around and 2) who you’re going to borrow money from and who you’re going to borrow money with.

So who you’re going to borrow from includes thinks like the terms and the conditions of the contract – reading the fine print before you go into it about when you can repay and when you can’t.  In terms of who you’re going to borrow with, we’ve seen the term Sexually Transmitted Debt come around over the last few months and whilst it is an amusing term, there’s a lot more to it and you want to make sure before you go into a lease agreement or a utility agreement or a loan agreement or a mortgage that you are on the same page with the person that you’re signing up with.  Are you going to be left with the debt when they walk away?  Are they going to help you make the payments on time?  The best tip really is once you’re in a contract is then to make the payments on time and to show to a credit provider today and for future applications that you’re able to stick to your obligations and your commitments.  That will improve your credit score and show a worthiness of credit.

If things do occur, really to protect your credit score accessing schemes like hardship and dispute resolutions are really important and all lenders need to provide you with access to these.

So there are some tips which hopefully help you to protect your credit score.

Hope you found this useful today and if you want to find out more information about this, follow us on Twitter @FairGoFinance or visit us on our Youtube channel.

Thanks very much, see you next time.

credit score chart

Image from InvestmentZen.



Related Articles

Can your spending habits affect your kid’s future?

When it comes to kids, all parents wish for them to be healthy, happy and financially secure. For their child’s financial well-being, some dream to raise the next sports champion

Read More
woman considering credit options

When is a personal loan better than buy now pay later?

  What would you do if you really needed to buy something but didn’t have enough money in your bank account? If Afterpay springs to mind, you’re not alone. This

Read More
managing bills and loans

Three tax tips to know before lodging your return

Do you ever work from home? Or use your home internet or personal phone for work purposes? Perhaps you’ve been doing some extra work as an Uber driver or renting

Read More

Are you eligible to apply?


It can be expensive to borrow small amounts of money and borrowing may not solve your money problems.

Check your options before you borrow:
For more information about other options for managing bills and debts, ring 1800 007 007 from anywhere in Australia to talk to a free and independent financial counsellor.

Talk to your electricity, gas, phone or water provider to see if you can work out a payment plan.
If you are on government benefits, ask if you can receive an advance from Centrelink.

The Australian Government’s MoneySmart Website shows you how small amount loans work and suggests other options that may help you.

* This statement is an Australian Government requirement under the National Consumer Credit Protection Act 2009.