How To Check Your Credit Score In Australia – Forbes Advisor Australia

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When you apply for credit, such as a bank loan or credit card, the lender must make a decision about whether you will be able to pay back the money you want to borrow.

To do this, they will look at your credit report, which contains a credit score and a credit rating. These things are an indicator of how good you have been at managing and repaying the credit you have been granted in the past.

It is important to understand what information your credit report contains and what your credit score and credit rating are before you apply for a loan.

How to check your credit score

There are three main credit reporting organizations in Australia: Equifax, Experian and illion. You can request access to your credit report by visiting their websites.

They are required by law to give you access to your credit report once every three months at no charge. Additionally, you can request a free copy of your credit report if you have been denied credit in the previous three months. You can also request a copy of your credit report at any other time; however, you may be charged a fee for this.

Each organization may have different information about you, so you may need to request your credit report from each to get a complete picture of your creditworthiness.

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What’s on your credit report?

In addition to identity information, such as your name, date of birth, address and employer, your credit report contains information about past or current loans or debts, and your repayment history related to them.

If you have ever defaulted on your repayment obligations, defaulted on loans or been declared bankrupt, this will also be included on your credit report, and if you run your own business, loans or business debts may also be included on your report of credit .

Your credit report also contains a credit score, which is essentially a summary of the information on your credit report. This shows your creditworthiness or the amount of debt you have and the likelihood that you will repay any credit granted to you, compared to other borrowers.

What the numbers mean

Your credit score will be a number between 0-1000 or 0-1200, depending on the credit reporting organization that calculated it.

Credit scores are segmented into several bands, known as credit ratings, ranging from low or below average to excellent. When it comes to your credit score, the higher the number, the better.

Below are the credit ratings relating to the credit scores assigned by each of Australia’s credit reporting organisations.

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Experience:

Excellent: 800-1000
Very good: 700-799
Good: 625-699
Fair: 550-624
Below average: 0-549

ilium:

Excellent: 800-1000
Excellent: 700-799
Good: 500-699
Room for improvement: 300-499
Low: 1-299

Equifax:

Excellent: 853-1200
Very good: 735-852
Good: 661-734
Average: 460-660
Below average: 0-459

Who looks at your credit score?

Whenever you apply for a loan or credit, such as a mortgage, car or personal loan or credit card, the lender will ask for a copy of your credit report from one of the credit rating agencies.

A potential employer may also look at your credit report as part of their background check process.

How to improve your credit score

First, you should request a copy of your credit report from time to time to make sure it is accurate. If you find any errors, please notify the relevant credit reporting organization or lender so they can correct them.

If your credit report is error-free but your credit rating is lower than you’d like, there are a few things you can do to improve it. These include:

  • Create a savings account with your bank.
  • Making sure you make regular and timely repayments on any existing loans or credit cards you may have.
  • Lowering the credit limits on your existing credit cards.
  • Limit the number of debts you have and the number of times you apply for credit.
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Will a credit check lower your score?

Formal requests to check your credit report from a lender have the potential to lower your credit score by 5 to 10 points each time, as they may indicate that you are in financial trouble and are applying for a large amount of debt or that has been rejected credit by other lenders.

Asking to check your own credit report should not affect your credit score.

Is the credit score check free?

It’s free to access your credit report once every three months, if you’ve been denied credit in the previous three months, or if you’ve asked for errors to be corrected on your credit report and want to make sure it’s been done.

Other times you may be charged a small fee to access your credit report.

What credit score do banks use in Australia?

As the largest of the credit reporting organisations, most Australian banks use Equifax credit scores in their creditworthiness assessments. However, they may also use information from other credit reporting organizations as well as their own internal risk assessment measures.

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