Credit Scores: Why They Matter and How to Improve Yours

Your credit score influences whether lenders will approve your loan and what interest rate they’ll offer. Moneysmart explains that your score is calculated based on how much you’ve borrowed, the number of credit applications you’ve made and whether you pay bills on time moneysmart.gov.au. Scores range from 0 to 1,000 or 1,200 depending on the reporting agency; higher scores mean you’re considered less risky moneysmart.gov.au.

How to get your credit score

You have a right to obtain a free copy of your credit report every 3 months moneysmart.gov.au. Contact credit reporting agencies such as Experian, Illion or Equifax moneysmart.gov.au. Some online services provide scores for free; avoid providers that charge a fee or ask for credit card details moneysmart.gov.au.

Improving your score

• Pay bills on time:  Payment history is crucial moneysmart.gov.au.

• Limit credit applications:  Too many applications in a short time can reduce your score.

• Reduce credit card limits and debt:  Lenders look at how much credit you have available and how much you’re using.

• Fix errors:  Check your report for mistakes and request corrections through the reporting agency.

  
  

A broker can assess your credit file and advise whether it’s strong enough for approval. They may suggest strategies (like closing unused credit cards) to improve your score before applying.