If you're looking to get a loan or mortgage, it's important to know what a good credit score is in Australia. Generally, if your credit report shows scores of 1,200, then a score above 853 is excellent, while above 661 is good. If your credit report shows scores of 1,000, then a score above 690 is excellent and above 540 is good. Most financial experts recommend having a score of 700 or higher, but this depends on your goals.
Your credit score gives banks and other lenders an indication of how trustworthy you are as a borrower. Numerical values are assigned to credit events in your file, with positive behavior adding to the score and negative behavior reducing it. Paying your bills on time will actually improve your personal credit score, so it's important to automate credit card and other loan payments. If any information is incorrect, out of date, or incomplete, you should contact your credit provider or credit reporting agency to investigate it for you.
Additionally, avoiding late payments and limiting the number of credit applications you make are two great ways to increase your score. Your credit rating is a critical factor that banks and other lenders consider when assessing your risk as a borrower. There is no official number agreed between banks and other lenders on the credit score that makes you eligible for a home loan. However, if you have scored 1,000 points, you are in an exclusive club made up of only 3.5% of all Australians.
In some cases, people with a good credit score may be offered better loan terms, including a reduced interest rate. Debt Busters has more than 15 years of experience helping Australians of all backgrounds navigate different loan options and understand their credit score. Among these signs, credit reporting agencies look at payment history, high-risk indicators, and previous types of credit providers used. Lenders consider several factors when considering your application, but credit rating plays an important role in the final decision. Low credit scores show financial institutions that you have historical problems paying off debt and classify you as a high-risk borrower.
For example, if you previously accessed credit from a non-traditional lender rather than a bank, this may influence your rating as the activity suggests a high-risk loan. It's important to remember that having a good credit score can help you get better loan terms and interest rates from banks and other lenders. To ensure that your credit rating remains healthy, make sure to pay bills on time and limit the number of applications you make for new loans or lines of credit.