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If you’ve been wondering ‘What is my credit score?’ and what it actually does, you’re not alone. For many Aussies, a credit score represents an elusive and confusing bit of data that they think is only accessible by banks or other financial institutions or lenders. 

Understanding ‘What is my credit score?’ and how it can impact your borrowing capacity is one of the most important parts of personal finance – and surprisingly easy. 

If you’re looking to borrow money – whether it’s to buy a car, a home, or another purchase – or perhaps take out a credit card, it’s important to have a good understanding of your credit record (and how you can access it for free and make it work for you) before you apply. 

Simply put, your credit score is a numerical reflection of your borrowing habits and repayment behaviours. It allows lenders to quickly assess the level of risk associated with lending you money or allowing you to open a credit card by using a ranked system.

Your credit report documents how many different types of credit you’ve applied for – such as loans or credit cards – the amount you applied for and when, the outcome of those applications, any debt you currently have, and your repayment history against those debts. This data is collected and assessed digitally and is how your credit score is calculated. 

Your credit score is a number between 0 and 1,000 (or 1,200, depending on which credit reporting agency you use). The higher your credit score, the better chances you have of gaining approval for the credit you’re applying for at a low interest rate. If your credit score is lower, you may be offered less credit than you’d hoped for, be given a higher interest rate, or even be declined. 

As such, knowing the answer to ‘What is my credit score?’ as well as ‘What is a good credit score?’ well before you apply for credit is important to increasing your chances of success.

How can I check my credit score?

It’s a good idea to check your credit rating periodically to make sure your credit report is in good health. Contrary to popular belief, you can find out ‘What is my credit score?’ anytime – and you don’t need to pay for it. 

Wondering how to check your credit score? Getting an instant credit check is easy with MONEYME Credit Score. 

With the MONEYME app, you can check your score in minutes for free and get personalised insights about your credit report. You will get access to information that banks and lenders use to evaluate your creditworthiness, tips and tricks to improve your score, and even special offers. 

Learning ‘What is my credit score?’ through a credit score check is as simple as downloading the MONEYME app (available in the Apple and Google stores) and entering a few simple details such as your name, number, email, DOB, address, and drivers licence number (optional).

Previously, your credit report only showed negative behaviours (e.g., missed payments and any applications or enquiries). When you applied to lenders, they only saw the blemishes on your record – not the good you did with the credit you were awarded. 

These days, lenders are also privy to what is called positive credit behaviours – showing all those consistent, timely repayments you’ve made too. This gives a much clearer borrower profile and allows lenders to assess your current circumstances and not just make a decision based on a rough patch you might have gone through four years ago but are well past. 

The more positive your credit behaviours, the higher your credit score – and the better chances you have of gaining approval for the credit you’re applying for. If you have a history of late payments or defaults (typically a payment that is more than $150 and at least 60 days late) or multiple open lines of credit, your credit score will be lower.

Answering the question ‘What is my credit score?’ has never been easier thanks to MONEYME. Simply download the MONEYME app and check your score in minutes.

What are the benefits of having a good credit score?

Having a good credit score is beneficial in many ways. 

Primarily, the purpose of your financial score is to reflect the level of risk lenders are taking when they approve you for a loan or credit product. So, the better your credit rating, the better you look to lenders like the bank or financial institution you’re seeking to borrow from – and the more likely you are to be approved. 

Damaged credit can impact the outcome of your application in a few different ways. You might be declined outright or offered a lower loan amount at a higher interest rate than you were hoping for. 

In such instances, it’s important not to shop around and apply for multiple credit products within a short amount of time. This is because every time you make an application for a line of credit, it’s recorded on your credit file. Multiple loan or credit card applications within a short period can damage your credit score significantly. 

How to improve my credit score?

It’s only natural to have experienced a few bumps in the road when it comes to your credit, and most lenders understand that. Whether it’s due to unexpected life circumstances, an accident, injury, illness, or a global pandemic, most people have felt the pinch at one point or another. Learning ‘What is my credit score?’ and understanding patterns in your credit behaviours can be confronting at first, but a credit score check might be beneficial to you.

Missing financial deadlines is never a good feeling, but there are ways you can protect yourself – and learn how to improve your credit score – under such circumstances. 

One of the first and most important tips on how to increase your credit score is to establish good credit habits. One of the most important credit habits you can have is meeting your repayments on time, every time. If you do get stuck making repayments on any line of credit you may have, contact your lender immediately to let them know and work out a payment plan or financial hardship arrangement.

It’s crucial to do this as soon as you realise you won’t be able to pay on time. This is because if you miss a payment or default on a line of credit, it gets recorded on your credit report and will remain there for years. When you’re under a formal financial hardship arrangement or equivalent, the missed repayments don’t get recorded and won’t be added to or impact your credit score for the duration of the agreement. 

The best way to improve your credit score is to demonstrate consistent, positive credit behaviours. You can do this by paying your bills and making repayments by their due dates, avoiding payday loans, and not applying for multiple credit products within a short period. Keeping your credit utilisation ratio low (in other words, not maxing out your credit limits) on credit cards is also a good way to improve your credit score. 

In summary, to take control of your personal finance, understanding your credit score is essential.