You need to plan well financially when hiring a car otherwise you may end up damaging your credit score further. A car is a luxury hat should be rented only when urgently needed.
Leasing a car is similar to renting because you pay for the period you are using the car. Car dealers will have to be sure of your capability to pay for the lease thus they will fall to your credit score for initial vetting. Your credit score provides an indication whether you can manage any repairs or pay for any damages when the rental period comes to an end. A higher credit score usually gets you the best payment terms and the lowest interest rates.
Minimum credit score
The lowest credit score that car dealers will accept for a car lease is 550. At this score, you get high-interest rates and somewhat rigid payment terms. Some car dealers may require you to have guarantors for them to approve the lease. In extreme cases with this credit rating such as when negative marks like bankruptcy appear on your report, the rental application can be rejected.
Good credit score with a co-signer
Listing a co-signer on your rental application can boost the chances off your lease proposal being accepted. This arrangement applies to individuals with a credit score between 620 and 700. A co-signer is equally liable for financing the rental agreement and paying for any damages.
Excellent credit score rentals
If your credit score fall in the excellent category, usually 700 and above, most of the car dealers will scramble to have you as their client. An excellent credit score indicates you are a low-risk customer for the car dealer. It is an indication that you can meet the financial obligations set out in the lease agreement with minimal difficulty.
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
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
Average ranges from 510 to 621 which is considered as a fair score when it comes to credit score.
Very Good
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
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.
Things you can do to improve your credit score
Having a bad credit score is similar to having poor health. Therefore, you need to take measures that ensure you are continually improving on it. The most efficient way of repairing bad credit is good management over time. Improving your credit score is necessary for you to be eligible for better terms and rates for loans in the future.
Regular credit report checks
You are advised to monitor your credit report regularly to see if it has any errors. A credit report brings you up to speed on your status as a debtor. Ensure that the payments are reported correctly and the amount owed to each creditor is correct. Errors must be disputed to your credit bureau promptly.
Reduce your debt
Most people usually take loans just because they are eligible for them without considering the potential damage to their credit score. For a start, you can reduce your reliance on credit cards. Design a plan that ensures you give priority to your debts that have the highest interest rates.
Payment reminders
If your monthly premium is not automatically debited from your account, you need to set up a payment reminder. Timely credit repayment improves your credit score over time. Some financiers usually send emails or texts to their clients to make payments.