If someone was to ask you what your credit score is, would you know the answer?
Many Aussies have no idea what their score is, and are only confronted with finding it out when they apply for something such as a loan, credit card or service such as a mobile phone contract.
Why is it so important to know your credit score?
Most lenders and service providers will check your score before they decide whether or not to approve your application.
By knowing your score, you’ll be able to manage your financial choices more efficiently and approach those lenders/providers that actively target customers with that level of credit score.
There’s also a number of other benefits to knowing your credit score, which we reveal further below.
What does your credit score tell them?
Your credit score basically tells a lender/provider what level your financial health is at and how reliable you’ve been with managing previous debts.
Simply put, the higher your score, the more you are considered a “low risk” customer who has a good history of repaying loans and accounts on time and is more likely to be approved.
What is a good credit score?
This will depend on which credit bureau you obtain your score from. In Australia, we have a number of bureaus and each has their own way of calculating it and a different range for their scores.
As an example, let’s use Equifax as a guide. Equifax’s credit scores range from 0 – 1200, and a good score would be anything above 700. Don’t worry trying to remember each one, as each bureau will always give a clear explanation of what their scores mean.
What other benefits are there to knowing my credit score?
By knowing your score will also mean you can actively do things to improve it (so you can negotiate the best rates and premiums) as well as protect it from potential fraud.
You can improve your credit score by:
- Paying your loans and accounts on time
- Paying your loans and outstanding balances in full
- Being consistent with your payments and if you do face financial difficulty, contact the lender/provider straight away so a solution or payment plan can be implemented
You can protect your credit score from fraud by:
- Checking your credit score/credit record regularly, in case your identity is stolen or used for fraudulent activities.
Many credit bureaus offer a service where they will regularly email you with your credit score (usually calculated once a month) and alert you if there has been any activity recorded.
Equifax offers a range of helpful services, starting at a cost of $80 per year. (August 2017)
Don’t ever underestimate how powerful your credit score is
Knowing your credit score can provide you with negotiating power. Because it gives a great indication of how responsible you are with finances, it can therefore help you to secure competitive rates and cheaper services.
How can I get my credit score?
You can read our blog – what is my credit score or if you need a personal loan, you could apply for a loan with us!
At Fair Go Finance we provide our customers with a copy of their credit score for free whenever you apply for a loan – it’s an additional service we offer so you can manage your finances and to help you go forward with your financial future.