Do you know what your credit rating (or credit score) currently is?
We understand it can be quite confusing, but it’s an important key to help you move forward in your financial journey.
Empowering you to understand and improve your credit rating is one of our goals, so let’s get started.
In Australia, your credit rating can be determined by a number of credit bureaus, including Equifax and Illion. Each has their own way of calculating your credit rating (or score) and although they may differ, their principles are the same. Here’s a general guide.
Good Credit (score over 700)
OK Credit (score between 500 and 699)
Not Great/Poor/Bad (score below 500)
Would you like to know exactly how your credit score is calculated? Well, unfortunately only the credit bureaus know their exact formula. All we know is that each bureau has their own way of determining your credit rating (score) and it depends on what is listed on your credit history with them. (Your details can differ with each credit bureau as lenders and service providers may choose to list their interactions with you with a specific credit bureau, i.e. not all of them.)
Your credit history records your personal details, such as full name, date of birth, employment and address, as well as any credit activity such as taking out a credit card/loan or using a service provider like a telephone, water or electricity company. It can also show if you’ve been late with paying any of your loans and bills. It’s generally calculated and updated monthly and looks at your credit history over the past 5 – 7 years. If you have never borrowed money or used a service provider, you won’t have a credit history. This means lenders won’t know if you can be relied on to repay a debt, and so it actually reduces your credit score and can make it harder to get a loan.
Comprehensive Credit Reporting : What is it?
Comprehensive Credit Reporting (CCR) is also referred to as “positive reporting”.
It officially began in Australia from September 2018 (being compulsory for the Big 4 Banks and optional for other credit providers.) It enables your credit report to include repayment history information and additional credit information which gives a more complete and fair picture of your credit history, such as when you make your loan repayments and if they are made by the due date.
Fair Go Finance was Australia’s first small loan provider to go live with CCR in October 2019. Since implementation, an immediate improvement in credit score has been seen for active loan customers with good repayment history.
To find out more about Comprehensive Credit Reporting, please read our blog “What is CCR?“.