Want to know why your credit score is so important? Whether you’ve experienced credit problems in the past or have never had a credit before, knowing your credit score is important. Here’s why…
Credit Score Explained
First of all, what is a credit score? Well, the easiest way to explain, it is a score given to you by credit reference agencies. A score is determined by weighing up all relevant information on your history and current borrowing situation.
Some points that can determine your credit score include:
- How many enquiries have you made within the last 12 months and over the past 5 years
- Do you have any unpaid or paid defaults. These can include utility bills, credit cards and loans.
- How many times have you moved address within the past 5 years?
- Have you had a name change?
- How old is your credit file?
- Have you been behind with any current accounts? Are you paying credit card payments on time?
How is this used?
When you are wanting to take out a loan – like a car loan, commercial loan, leisure finance, personal finance, personal loan, home loan or equipment loan, the lender will look at your overall credit report to determine whether or not to lend you the money, how much to let you borrow and even what interest rate to charge you.
Think of it like a financial passport, it will clearly show lenders who you are, how well you manage your money and how financially able you are to pay them back.
If you are applying for a loan or finance your credit score plays a major role, alongside things like your salary. Thus, taking care of your credit score is important. Make sure to make sensible credit choices and develop healthy credit habits:
- Pay your bills and credit repayments on time;
- Don’t max out your credit cards; and
- Don’t apply for multiple loans and credit cards at the same time.
Look to the future.
Don’t assume that your credit score doesn’t matter just because you don’t currently have a loan or aren’t currently thinking about borrowing. You never know what is around the corner, and maintaining a great credit score can seriously help future you do things like start a business, become self-employed or even get a mobile phone plan!
To check your credit score, there are a number of free online credit reporting agencies. Most banks and financiers access Equifax and you can check your credit score here.
If you’re buying a car, you can access the advantages of getting car finance here.
If you are currently looking for a loan or finance option, iCREDIT’s simple loan application can help you find, compare and choose a suitable loan with confidence to meet your lifestyle and budget requirements.
Our personal finance consultants can assist you with finding a competitive finance package through Australia’s leading banks and financiers tailored to meet your needs.