Your credit score is a reflection of your financial behaviour and your risk level to a new credit provider. In Australia, an average credit score is 855, but a good score can range from 622 to 1200 and is based on several factors.

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Your credit file shows how you manage your current &previous debts as well as displaying basic personal information and listing any applications you have made for a credit facility over the past 5 years.

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Your credit score not only impacts your ability to secure loans and credit but can also affect the terms of those agreements. Real estate property managers may also use them if you make an application to rent a property. With so much at stake, maintaining a healthy credit score is more crucial than ever

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Below are the main factors that impact your credit score

• Number of Credit Enquiries & Shopping Habits: Every time you apply for a credit facility, even if the application does not proceed or you do not use the facility, the enquiry is listed on your credit file and will have an impact on your credit score. If you are shopping around for the best deal and make multiple credit enquiries over a short period of time, a credit provider may see this as an indication that you are a higher risk. Credit enquiries include home loans, personal loans, credit cards, buy now & pay later facilities, interest free loans, debt agreements, commercial loans & utility applications.
• Types of Credit: The type of credit accounts and credit providers, both opened and applied for will impact your credit score. Different credit providers have different risks, for example, a credit card facility with a standard bank will have a different level of risk and different impact on your credit store than a credit facility to a payday lender (buy now, pay later).
• Repayment History: Credit providers record your debt repayment each month and so your credit file will display every repayment for the past 24 months. Any     late repayments recorded on your credit file will reduce your credit score and can impact future credit applications. On the other hand, an ongoing record of repayments being made on time, will increase your credit score.
• Hardship or Repayment Holiday Arrangements: If you are experiencing hardship or have a temporary circumstance where you are not able to make your repayments, you can request a repayment holiday from your credit provider. They will agree to put your repayments on hold for 6 months however this agreement will show on your credit file and can impact future applications for credit.
• Amount  and size of your current credit limits: Both the number of current credit facilities and the size of the credit balances you currently have open will have an impact on your credit score.
• Length of Credit History : Both the date your original credit file was established, which is the first time you apply for a credit facility and the length of time you have held your credit accounts has an impact on your credit score.
• Defaults & Court Actions: All serious default information, credit infringements, debt agreements & court actions are recorded on your credit file and are an indicator of significantly increased risk to a lender. These will reduce your credit score and some credit providers will automatically decline a new application for credit if these are present on your credit file.
• Directorships & Proprietorships: Commercial details are recorded on your credit file when you have or have had (within the last 5 years), a directorship of a PTY LTD company. There are occasions when you will be asked to confirm the nature of these enquiries and in most occasions, the details of your company ownership / shareholding. It is not necessarily a detractor but can mean that you may need to provide additional information or tax returns on a new credit application.
• Your Personal Information: Your credit file displays personal information which goes towards establishing your stability such as age, employment history & residential history.

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You should be aware that your credit score and credit history is used as an indicator (to credit providers) of your likely future financial behaviour. Whilst you may have explanations for late payments and multiple credit enquiries, many lenders will automatically decline you based upon the activities that appear on your credit file. Rightly or wrongly, you will be profiled by credit providers based upon the contents of your credit file. By understanding how you will be viewed, restricting your credit enquiries and making your repayments on time, you will increase the appetite that future credit providers have to lend to you.

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Assured Lending work with over 40 of Australia’s leading lenders who all have different criteria & credit policy when assessing your credit file on a new loan application. Contact us today if you have questions or concerns about your credit file or would like more information on your eligibility for a new credit application.