Are you one of the 52% of Australians who don’t know how to read a credit report?
Most borrowers in Australia don't fully understand how their financial decisions affect their credit report. A survey by Experian showed that 65% believed that contributing to super or saving
money can have a positive effect on their credit rating, and 33% were concerned about their ability to manage and access credit.
How do I get my credit report?
You can access your credit report for free once every 12 months, through any of the major credit reporting agencies. This includes:
– Dun & Bradstreet
Even if you’ve already used your annual free credit report, you can get a second copy for free when:
1. You’ve applied and been refused credit within the last 90 days
2. Your request relates to a decision by a credit provider or credit reporting body to correct information in your credit report.
How do I interpret my credit report?
Your credit report contains two types of information. First, there’s a score between 0-1200. This is broken down as follows:
– 0-509 is a Below Average score, predicting that you might have an adverse credit event on your report in the next 12 months.
– 510-621 an Average score, indicated a risk of an adverse credit event in the next year.
– 622-725 is a Good credit score, in the mid-range of the population.
– 726-832 is a Very Good score, putting you in the second highest percentile range of the credit population.
– 833-1200 is an Excellent credit rating.
There’s also some information on how your score was determined, including any serious credit defaults or bankruptcy within the last seven years, and 2 years credit repayment history.
How is my score calculated?
Your credit score takes into account the types of credit that you access and the size of your credit applications. It also considers the age of your credit file, length of employment, time at your
current address, and your age.
Your score also reflects any credit defaults or missed credit payments. Note that missed payments refer to missed payments to a credit provider, not missed retail credit, telephone or
electricity bill payments.
It also takes into account the number of credit applications that you make – if you make frequent applications to short-term lenders, this indicates that you are struggling to manage cash flow.
Any directorship responsibilities you’ve held also appear on your file.
How do I improve my credit score?
Prioritising your repayments to credit providers each month, or requesting a compassionate repayment break when you can’t meet the payment in full will ensure that missed payments aren’t recorded on your credit file.
If you have lines of credit open that you don’t use, reducing these will also positively impact your score.
Now that you understand what makes up your credit score, you can actively manage it to improve your credit score.
Positive Lending Solutions is a car and personal finance broker dedicated to making access to finance easier for Australians. Focusing on making finance available right from your mobile, with faster and simpler processing, Positive Lending Solutions is committed to empowering Australians to make the most of their finances with access to information that will empower them to build a strong financial future.