Finance

Understanding Your Credit Score

July 27, 2020

Are you not really sure what your credit score means or have you recently applied for credit but have been knocked back due to your credit score?

Here at Funding Force we don’t only help our clients obtain finance but also want to help consolidate your debt and get you back on track. We have created a few dot points with the most commonly asked questions regarding credit scores.

What is a Credit Score?

A credit score is a number that ranges from 0 – 1200 and is obtained by lenders to help provide insight on your score and calculate your risk estimate. The primary reason they are used by lenders it to help predict the likelihood of a future adverse event being added to your credit report within the next 12 month period.

What is included in a credit report?

There are a few things included in your report that lenders look at closely to help base their decision when offering finance and that is what is included on your report so we have listed the key contributing factors that are listed on the report.

Consumer Default Information – Having a current default on your report can really impact obtaining credit as it’s an indicator of risk factor.

Public Adverse Information – The existence of this on your credit file also known as court judgments is another indicator of risk factor.

Current Credit Enquiries – This shows if you have recently been trying to obtain credit, if you have been trying to obtain credit multiple times in a short period it can be an indicator of risk.

Historical Credit Enquiries – This shows your history of type and frequency of trying to obtain credit. If you have a higher frequency over a short period of time it can be an indicator of risk.

How can I fix my credit score?

No one is perfect and we have all made a mistake at one point in time, just keep in mind that although your score may not be ideal at the moment it isn’t forever and it is repairable. Firstly, obtaining a copy of your report will help you identify anything that is negatively impacting your credit. Once you have done that you can then contact the individual lenders to discuss your option in rectifying it. By paying off your debt it will be a weight lifted off your shoulders but over time your credit score will begin to improve. Going forward though be sure to pay off your bills on time, paying things on time also will increase your score over time.

How can I obtain a copy of my credit report?

Did you know that you are able to obtain your free credit report? There are 3 main reasons you are eligible to obtain your report which are if you have been declined credit, corrections on your report or wanting just wanting to check your report once every 12 months. Obtaining a copy of your report doesn’t affect your credit score and you are able to obtain your free credit score via https://www.equifax.com.au/

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