Like many other countries in the world, in Australia, the credit score are calculated using an algorithm that gathers the credit information from your credit files. The credit score uses credit information from your credit history, your credit patterns, characteristics of your credit score of your credit profile and more.
The credit score uses the patterns in your credit history, the spread of your overall credit inquiries and adverse aspects of your credit report. Adverse aspects from the credit information include bankruptcy, defaults, delay in your credit periodic payments, severe credit infringements and court judgments which have a significant negative impact on your credit score.
The characteristicredit score of your credit profile are analyzed. To understand the element of risk, your age, and length of employment are considered. The age of the credit history also has an adverse impact on the credit score. If you have a business or an entrepreneur, the overall market will be analyzed to assess your financial capability.
The existing different types of credit that you hold and the credit providers are also considered. Other factors that impact your credit score may include the likes of repayment history, the number of inquiries you have made in the recent past and the number of credit account that you have.
What is a credit score in Australia
What is a credit score in Australia, you may ask? Find out more about it by reading the information below.
A credit score in Australia is important when applying for a loan or credit. The reason behind this is because the lending companies and bank use this as a basis whether they should approve your application or reconsider you by asking for more requirements.
Accessing Your Score
There are now a lot of websites that can help you check your credit score for free. All you need to do is to provide your name, email address, home address, contact number and your Social Security Number's last four digits.
Accessing Your FICO
It would also be essential to check your FICO since most lenders are using it to check your score. You can get a free report, so you don't have to spend anything to know your FICO score.
How are credit scores calculated in Australia?
The credit score helps the lenders or financial institutions in assessing your credit history and creditworthiness in Australia. Using your credit score, the lenders in Australia will determine the risk aspect involved in lending you loans such as home loans or mortgage.
Different aspects are taken into consideration to calculate your credit score. Some of the major points include the following:
First, your default history is considered. Default history includes your overdue payments and payment defaults. Second, the number of inquiries made by lenders or the credit providers. Third, the number of credit-related inquiries that you have done in the past 12 months period. Finally, your overall credit acquiring pattern in the past.
The different percentages are allotted to the characteristicredit score mentioned above and possibility of adverse events, which is your credit default, listed for the next 12 months on your Veda Credit file.
Explanation of credit score ranges in Australia
There are different explanation of credit score ranges in Australia. Find out by reading the information below.
Australia has credit score ranges that you should know, for you to be able to get familiar with it. Here is the credit score information that you need to know in Australia.
Below average score ranges from 0 to 509; wherein you are known to be included in the 20% of the population who are at the bottom.
Average ranges from 510 to 621 which is considered as a fair score when it comes to credit score.
Very good ranges from 726 to 832. Almost 80% of the population has this score and is known as the second highest score to achieve.
Excellent ranges from 833 to 1200. People with this score can easily avail of loans and credit cards.
How to improve your credit score in Australia
You need to have an active credit card. Lenders are wary of borrowers that have zero or no credit history. You need to pay your bills and other credit payments on time. It shows on your credit report and eye catching for the lenders that look into your credit reports before giving approval to your loan application.
Avoid additional hard credit inquiries. A hard inquiry is one which involves financial institutions and banks requesting for your credit reports. Because ?hard inquiries' take off a few points, from your overall credit score or your FICO score.