Do you know
your credit
score?

Each credit reporting agency calculates your score uniquely based on various factors, such as your repayment history, length of credit history, and credit mix. They also assign different weights to each factor. If you’ve ever wondered why your credit scores range differently across these agencies, this would be the reason. 

There are several reasons why maintaining a good credit score is important. With a good credit score, you increase your chances for better credit offers or favourable interest rates. Not only that, it can determine your creditworthiness for life-changing opportunities, such as business investments or housing applications.

Thankfully, there are ways to improve your credit score or rating. Take the following, for example.

Pay your financial obligations on time.

Your credit score is based on more than just your debts. Other financial responsibilities can find their way into your credit history, even if you have no ongoing loans or lines of credit.

In Australia, credit providers can also include businesses or retailers that provide services on deferred payment, such as utility providers. These providers can report any defaulted or missed payments to the credit reporting agencies, which will then go into your credit report for a long time. Defaults, for example, will stay on your credit history for up to five years.

Be mindful when applying for a credit product.

A common mistake for many is assuming that credit applications don’t affect their credit scores range, particularly if they’re denied.

The opposite is true. Credit applications require hard enquiries into your credit history. Hard enquiries, which are in-depth reviews of your credit by lenders or creditors, are recorded in your credit history and will stay on your record for five years. Thus, multiple applications may indicate financial hardship to credit providers, impacting your creditworthiness.

Report any errors in your credit history immediately.

Regularly reviewing your credit report is important. Your credit report will provide a comprehensive overview of your credit health, such as past and present debts, repayment histories for credit products, and other public information related to your financial situation.

If you discover any errors in your credit report, you can immediately report them for correction or dispute with the concerned credit provider or credit reporting agency.

Generally speaking, good credit scores range from 600 to 1,000 or 1,200. The higher your score, the more likely you’ll be considered creditworthy by creditors and financial institutions. This is why many Australians seek advice regarding improving their credit score ratings – a good score can open up new opportunities that they may not otherwise have access to.

In Australia, credit score ratings are calculated by three credit reporting agencies: Equifax, Experian, and illion. Each of them also classifies what’s a good credit score differently, though there are similarities between the three.

Equifax credit scores range from 0 to 1,200 and are broken down into five classifications. In ascending order, these classifications are as follows:

• Below average (0 to 459)
• Average (460 to 660)
• Good (661 to 734)
• Very good (735 to 852)
• Excellent (853 to 1,200)

Meanwhile, Experian calculates its credit scores a bit differently from Equifax. Instead of a credit score ceiling of 1,200, Experian credit scores range from 0 to only 1,000. Their score classifications in ascending order are the following:

• Below average (0 to 549)
• Fair (550 to 624)
• Good (625 to 699)
• Very good (700 to 799)
• Excellent (800 to 1,000)

Similarly, illion credit scores range from 0 to 1,000 as well. Their classifications go a bit differently from the others, as outlined below:

• Zero score
• Low score (1 to 299)
• Room for improvement (300 to 499)
• Good (500 to 699)
• Great (700 to 799)
• Excellent (800 to 1,000)

Ideally, you should get a credit score report at least once a year from all three credit bureaus.

You can request a free credit report once every three months from each of the credit reporting agencies. You can also ask for an additional free copy if you’ve requested corrections to your credit record or if you’ve been refused credit in the past ninety days. Any additional requests may require a fee; however, this fee should not be substantial.

But there’s an even simpler way to access your credit score!

You can get credit scores for free through the MONEYME app’s Credit Score tool. The MONEYME app is available for download through the Apple App Store and Google Play Store. Through the app, you can check your credit score free of charge within minutes of creating your account. You’ll also gain personalised insights about your credit score, as well as access to financial wellness advice and special offers.

To create a MONEYME account, you will be asked to provide some basic information about yourself, such as your name, date of birth, current address, and other contact details.

Credit scores represent your creditworthiness and financial responsibility, and they can be improved over time with responsible financial habits. You can utilise tools such as the MONEYME app to help you track and improve your score. It’s never too late to start working on your credit – your future will thank you for it.