In some cases, it may also have a positive impact on how much they will lend you, the interest rate they charge and other credit or loan terms. Having a higher credit score than average for your age may mean lenders are more likely to approve your application for credit or a loan compared to if you had an average or below average score. What is considered a ‘good’ credit score depends on what you need to use it for, and other variables, such as your lenders’ approval criteria. Sometimes also known as a ‘credit summary’, the document contains a summary of your credit history, which can include your credit enquiries, bill payments, any defaults, court judgements and how much credit you currently have (for example mortgages or credit cards). Credit Report: A credit report is what your credit score is based on, and is what a credit reporting body produces.The higher the score, the more creditworthy you’ll likely appear. Credit Score: A credit score represents how trustworthy credit agencies have assessed your reputation to be, as a borrower as well as how likely you are to pay your bills on time.Just to recap, here definitions of some key terms that might help: → You can check your credit score for free Generally, however, a higher credit score is considered better because it indicates a more reliable borrowing track record, and as a result, a lower credit risk. In Australia, there are three main credit reporting agencies: Equifax, Experian and Illion.īecause each agency uses different credit score ranges to categorise consumers’ scores – as well as having different ways of calculating the scores – what constitutes a ‘good’ credit score will really depend on which agency you’re asking. Your individual credit score will usually sit somewhere on a scale of zero to 1,000 or zero to 1,200, depending on which credit reporting agency you go through. This report shows a detailed record of your history as a borrower and includes information such as how much you have borrowed in the past and whether you have paid the money back on time, as well as the details of any credit card or loan applications you’ve made recently. Your credit score is calculated based on the information in your credit report. What is a credit score?Ĭredit providers, such as banks and credit card providers, are required to pass on certain information about your financial behaviour to credit reporting agencies. But how do you know if you have a good credit score? And what if your score is currently low and you want to increase it? We explore these questions below. If you have a good credit score, this signals that lending you money is likely to be less of a risk. Your credit score gives banks and other lenders a general picture of how reliable you are as a borrower. However, whether or not it’s a ‘good’ credit score depends on what you need to use it for, what credit product you hope to take on, and via which financial institution you are applying for credit. Different credit reporting agencies use different scales for their credit scores:
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