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As a credit repair company we often meet clients when they’re desperate to obtain finance.
Good credit is not something we’re taught in school, yet it’s critical that every Australian consumer understands how credit reporting works in order to ensure success in our modern lives.
What is a credit report?
Before I dive further, I just want to educate you on what a credit report is and how it works.
Basically there are three credit reporting bureaus in Australia. In order of importance, Equifax, Illion & Experian.
When you apply for credit with a bank for example, this information is then shared with the credit reporting bureaus.
When you make payments on your accounts on time or not this information is shared and forms part of your credit history.
If you default on your obligations further action may turn into a default or a judgment. Normally dependant on the credit providers processes this information will then end up on your credit report.
Your credit file contains identity information, address details, employment details and company directorship information.
All of this information forms your credit file and its updated instantly when new information is required to be reported.
This information forms your credit score. Positive information will increase your credit score and negative information will likewise decrease it.
What does good credit look like?
Equifax
Excellent | 853 – 1200 |
|---|---|
Great | 735 – 852 |
Good | 661 – 734 |
Fair | 460 – 660 |
Below average | 1 – 459 |
Illion
Excellent | 800 – 1000 |
|---|---|
Great | 700 – 799 |
Good | 500 – 699 |
Fair | 300 – 499 |
Below average | 1 – 299 |
Experian
Excellent | 800 – 1000 |
|---|---|
Great | 700 – 799 |
Good | 625 – 699 |
Fair | 550 – 624 |
Below average | 1 – 549 |
Is good credit important?
Yes, it absolutely is. Now that you have a bit more understanding of what is on your credit report, the following reasons are why you want to ensure you only receive positive credit reporting information.
Good credit may give you access to finance
Your credit score determines the perceived risk associated with lending you money. If you have a good credit score it enhances your ability to secure finance for things like a home, cars, credit cards and the like.
Lenders use your credit score to assess how good you are at paying your bills on time. The more positive information on your credit file the better your score will be.
When it comes to finance, each credit provider has their own lending policies with different credit score requirements. The better your credit score the more finance options you’ll be able to qualify for.
This includes things like interest. A low credit score may qualify you for high interest credit or the inability to be approved. Whereas a good credit score may give you access to much better interest rates and products.
Want to buy a home? You'll need good credit...
Australians often rely on a mortgage to purchase a home. A strong credit history is essential for obtaining a mortgage with competitive interest rates. A good credit score demonstrates financial responsibility and can make the dream of owning a home more achievable.
Good credit may give you access to lower interest rates!
With a higher credit score, you’re likely to qualify for lower interest rates on loans. This can result in significant savings over time, reducing the overall cost of borrowing money for various purposes.
Good credit is also important if you're a renter!
Renting a home may require a good credit score to be considered.
Landlords and property managers may perform checks that include some credit data. This may influence your ability to rent a home.
Everyday services require a good credit score
Telephone and internet services
Most people can get by on a prepaid mobile phone these days, however if you want to pay on a plan or have access to internet services, good credit is imperative to being approved.
Electricity and gas services
When setting up utilities the energy companies will perform a credit check, if you don’t have good credit you may not be approved for electricity or gas services. A good credit score can facilitate easier approval for these services and may even lead to cheaper pricing.
Insurance premiums
In some cases, insurance companies may consider your credit history when determining premiums for various types of insurance.
A good credit score may contribute to lower insurance costs. Whereas a poor credit score.
A good credit score may influence your ability to secure employment
Some employers in Australia may check an applicant’s credit history as part of the hiring process, particularly for roles that involve financial responsibilities. A positive credit history can contribute to a positive impression on potential employers.
In summary...
A good credit score provides financial flexibility. It allows you to navigate unexpected expenses through the ability to borrow money, take advantage of opportunities, and manage your finances more effectively.
Whether it’s buying a home, purchasing a new car or applying for services a good credit score is required. It opens doors to additional opportunities and can help you achieve your long-term financial goals.
Maintaining good credit in Australia is essential for securing and building a strong foundation for your future financial success.
What should I do if I dont have a good credit history?
You can obtain a free copy of your unscored credit report from the credit bureaus directly.
Click on the bureau name to visit their website and apply. Equifax, Illion & Experian.
If you’d prefer a scored credit report (what the banks see) or are a company director or hold an abn and want to obtain trading and commercial data then get in touch with us.
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