A person’s credit history is kind of like an invisible Sword of Damocles. We know it’s out there, but tend to adopt a head-in-the-sand approach until it suddenly chops you in the neck. Fortunately, it’s possible to improve your creditworthiness in a few easy steps. This infographic illustrates how to swing credit scoring back in your favour.
[credit provider=”Shutterstock” url=”http://www.shutterstock.com/pic-158995727/stock-photo-hand-putting-check-mark-with-green-marker-on-excellent-credit-score-evaluation-form.html”]
In Australia, civilians do not have a set number representing their creditworthiness like in the US. However, credit scoring is still used to determine everything from home loan approvals to setting the credit limit on crappy retail store cards.
The system relies on negative credit reporting such as adverse listings indicating a default under a credit contract. However, you can also lose points for simply making a lot of credit card applications or frequently changing jobs.
Here are a handful of tips and potential pitfalls that credit applicants should be aware of, courtesy of Home Loan Experts.
Comments
13 responses to “How To Improve Your Credit ‘Score’ [Infographic]”
I was pretty sure there’s no such thing as a credit score in Australia. Only a credit history.
False.
http://www.experian.com.au/blogs/business-management-news/2014/03/11/three-quarters-of-australians-unaware-of-new-legislation-to-change-the-way-credit-lenders-grant-credit/?intcmp=cs_ccrpress_hpexperian_201404
https://www.veda.com.au/
The act has introduced more detail into credit profiles to be shared with lenders, but there is still no thing as a ‘credit score’ in Australia.
Previously lenders could only find out what loans you had applied for (not even which you were approved for), and whether you had defaulted on a loan.
Just looked at the Veda link and saw the ‘VedaScore’. This is something created by Veda as a product/service to lenders. Have to admit I don’t know much about it though.
Note, lenders really don’t care if you have the ability to repay your credit card on time, they actually hope that you don’t. I have seen for myself some of the calculations banks use to determine if you can afford to service a credit card or loan. Basically, if you will be left with $100 per fortnight after bills and making a minimum payment, the bank is happy to give you a credit card.
Banks are scum.
Hi kapone, tenzing from Home Loan Experts here,
VedaScore is basically a figure that compares you as a borrower to the rest of Australia.
Many lenders have Veda’s score feed directly into their own scorecard that they use to assess loan applications. Others ignore the VedaScore and just use the data from your credit file.
Whilst your score with Veda will not be the only factor that the lender considers, it will make a big difference to the lender’s own credit score and the outcome of your application.
First part says “Look at your credit file. Get a copy from your credit agency …”. How do I find out who my credit agency is? I don’t remember signing up for anything like that.
I believe it was somewhat worded incorrectly as I’m pretty sure there’s only 1 ‘Credit Agency’ which is Veda Advantage, the same company whom also hold all the credit files for NZ as well. Go to http://www.veda.com.au and look for the instructions there on getting your credit file.
It does depend which state you’re in, actually.
So which ones do we go to in each state?
What state are you living in ricadam?
I applied and requested my credit file , will update with details when I know what it contains
There are actually 3 main credit bureaus in Australia: Veda, Experian and Dunn & Bradstreet. Tasmania has its own Tasmanian Collection Service. While you can get your free credit report with any of these agencies once a year (and whenever you’re refused for credit), each agency can also provide your individual Credit Score as a paid service, so it’s never included as part of your report. Your credit score is calculated based on the information in your file, and will differ from agency to agency. Banks for example, also have their own algorithms for calculating your “credit score” as a way to assess your level of credit risk. Knowing your credit score can be a useful, particularly when you have good credit and are in a position to negotiate lower rates, more rewards and other bonuses with your credit provider.