Your credit score is an important piece of information about you. It is a score that can influence how successful or unsuccessful you are at getting a loan or a service provided.
Your credit score is “calculated” using the information listed on your relevant credit report and is presented as a number (score).
The higher your score on the scale, the better your chances are of getting a loan or service agreement.
Your credit score is dynamic, which means it can change, depending on what happens on your credit report. They are often calculated once a month and updated accordingly.
In Australia, we have four credit reporting agencies who manage individual credit reports and will provide this information to lenders/service providers when requested. They are;
Remember, your credit report is different to your credit score. All of the above agencies can provide you with a copy of your credit report if one is held with them.
Each credit agency has their own way of calculating their credit score, which means your score is likely to be different between each one.
For example, when you obtain your credit score through Equifax, it is a number between 0 – 1200. If you obtain your credit score through Experian or illion, it is a number between 0 – 1000.
The key to your credit score is understanding where it actually fits in the relevant credit agency’s “ranking”. For example, if your score is over 833 with Equifax, you are in the top or “excellent” ranking.
With Experian, you are in their top ranking if you score over 800. Similarly, if your score is below 509 with Equifax it is considered below average, whilst with Experian it is anything below 549.
The higher your score, the better chance you have of getting a loan as well as the lowest rates. The lower the score the harder it will be for you to get a loan, and if you do, the rates will be higher.
Just remember that each of them will hold different information and will calculate a different score, as it depends on which lenders/service providers have chosen to use them.
Equifax, illion and Experian all allow you access to your credit score. The process is very simple, you provide a few details online and you will be provided with your score within minutes.
Knowing your credit score and what it means can help you understand how likely lenders and credit providers will approve you.
With this knowledge you can then be confident when dealing with them. You can also look at ways to actively improve your score and ensure you protect it going forward.
As you can see, your credit score provides a lot of important information about you, so it is certainly worth obtaining and looking after.