What Is A Credit Score?
A credit score is a number that is meant to relay to creditors how reliable you are with your credit.
Because of the complexities in determining your credit score, it can be difficult to know precisely what might be causing your score to swing one way or the other.
The score ultimately goes from 0 to 1,200, and anything over 800 is deemed excellent. Whereas, anything under 600 is considered poor, and the middle ground represents a ‘good to very good’ score.
Your score is ultimately calculated through the 4 different central credit reporting agencies in Australia. The score is calculated over the entire period you had your first credit account.
What Makes Up Your Credit Score?
There are a lot of different factors that can go into your overall credit score. It can be impacted by your age, living situation, current debt owed, how much credit you have access to, how much of that credit you are using, the total number of credit applications you have made in the past, types of credit you have, your payment history, and any bad debt that you might have.
As you can see, there is a lot that goes into your overall credit score and various factors that dramatically swing your score up or down. Essentially, it is a comprehensive report of your entire credit history. Because even the smallest issues can negatively impact your score, you want to keep a close eye on it by requesting regular credit reports to ensure that everything is correct.
Why Is It Important?
Your credit score is something that is very important as it can have wide-ranging implications in your life. For one, it is going to be used to determine whether or not you qualify for future credit cards, loans, and more. Therefore, anytime that you are applying for a credit of any kind, you can expect a credit check as your score essentially dictates what you are going to be able to be approved for and what interest rates you will be eligible for.
What Does Good Credit Get You?
If you are someone that has good to very good or even excellent credit, you are going to be able to benefit in a variety of ways. For one, you will be able to ask for discounts on your home loan. Essentially, you will be in a much more advantageous position to negotiate with your home loan provider which means that you might be able to get much lower fees and you might even be able to request certain fees be completely waived altogether.
Another good thing that you are going to be able to benefit from with good credit would be the ability to have much more flexibility with your credit card situation. If you are in a position where you could apply for a brand new credit card at any time, you are going to be able to take advantage of competitive sign-up fees that can earn you a lot of new rewards whether it be through cash back offers, rebates, or travel credits.
How To Improve Your Credit Score?
If you are someone that has less than stellar credit, you might be in for an uphill climb, but there is plenty that you can do to improve it. One of the most important things that you are going to want to do if you are struggling with a poor credit score would be to pay off your debts as soon as possible.
If it is impossible to pay off your debts in full, you are going to want to ensure that you are paying off the minimum for each bill that you are issued. As long as you are paying the minimum, you are not going to have non-payments sent to the credit agencies. While it is certainly not going to be great as far as interest is concerned, it will help you avoid negatively hitting your credit score with non-payments.
You will also want to monitor and keep the number of credit applications down. While it won’t hit your credit score too hard, you want to avoid making multiple inquiries with credit agencies if you are looking to keep your credit score high to take out a home loan or something of that nature.
Along with this, you are going to want to monitor your credit report completely and credit score to see when it changes and to potentially see whether listings are removed.
Overall, your credit score is something that should be taken seriously. It can positively or negatively impact your life depending on what stage you are in and what you are looking to do. Having a good credit score can really provide you with many benefits. By following our tips above, you should be able to improve your credit score significantly.
We are here to answer any questions you have. If you wish to talk to us or apply for a line of credit without any surprises, contact &Solved today.