
Your credit score has a major influence when lenders process your application for credit cards and loans. But what is a credit score? In short, your credit score, also known as a credit rating, is a number that indicates your reputation as a borrower and the track record of your repayment history. This snapshot of your credit history gives financial institutions an idea of how much of a risk it will be to provide financing, and the likelihood you’ll make your repayments.
At Loantec we know how your credit score can affect your ability to get a loan, and our Finance Technicians will work with you to find the right type of loan for your circumstances. Simply fill in our online pre-qualification tool and you can get a complete picture about your financial situation.
How is a Credit Score Calculated?
There are three primary factors that determine your credit rating. These are your credit history, credit profile and past finance applications.
Credit History
Lenders analyse your credit history for indicators of how risky it will be to give you a loan or extend you a line of credit. Things like missed or late repayments will lower your credit score.
Credit Profile
Your personal details and how long you’ve had a credit history influence your credit profile. Factors including your age, employment history and how long you’ve lived at your current address contribute to your credit profile.
Credit Applications
Every time you make a credit application, it has an impact on your credit score. A high number of credit applications can have a negative influence and having less is usually seen in a positive light.
Where Do Credit Scores Come From?
There are 3 credit reporting agencies in Australia, Experian, Equifax and Illion. Also known as credit bureaus, lenders will source your credit score from one or more of these agencies. It’s important to note that financial institutions in other countries don’t affect your credit score in Australia.
Why Your Credit Score is Different Between Reporting Agencies
The information on your credit file may not match the data other agencies provide. They each use different algorithms and methods to interpret the data.
Two different number scales are used to rank your credit ranking. Equifax uses a ranking system between 0 – 1200, whereas Experian and Illion use a ranking system of 0 – 1000.
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What is a Good Credit Score in Australia?
A good score will change depending on which system you’re using. Broadly speaking, a ranking above 800 is considered excellent and anything below 500 is poor. All credit rankings in-between these scores are average*. When you make an application with most lenders, a low credit rating may result in higher interest rates or rejection of the loan. At Loantec we don’t focus on your credit score and take the time to understand your situation to get you the best interest rate possible.
What if I have Poor Credit?
Many of our clients believe their previous credit history means they can’t get a loan. Loantec’s Finance Technicians have helped thousands of people with poor credit successfully consolidate their debts, finance a car, and start their own business.
The only way to truly understand your options is to have our Finance Technicians assess your situation to discover your factual options. Get in touch with our team today.
What if I Have No Credit History?
If you haven’t had any loans, credit cards or finance from lenders, you probably won’t have a credit score. Without a credit rating most lenders won’t consider you for a loan or will charge you additional fees to cover potential losses.
Will My Credit Score Stop Me from Getting Finance?
Most lenders will view your application negatively after seeing a low crediting rating, and you’ll be less likely to get approved.
At Loantec your credit score has less of an impact on your ability to get a loan as compared to the banks. Give our Finance Technicians a call to learn all the factual details about your financial situation and we’ll work to get you the best deal possible.
What Affects Your Credit Rating?
What Has a Positive Effect on Your Credit Rating?
Increasing your credit score is a process that takes time. A good repayment history will slowly but surely increase your credit score. There are also types of debt that credit agencies consider to be good, such as a history of paying back loans from reputable sources like banks. Paying your utility bills and other essential costs will increase your credit rating as well.
What Has a Negative Effect on Your Credit Rating?
Unfortunately, it’s very easy to hurt your credit rating. Any debt of $150 or more, that’s older than 60 days becomes a default. These stay on your credit file for 5 years.
Late payments can also go on your record even if they’re paid before going into default.
Bankruptcies will dramatically hurt your rating. They stay on your record for two years after the bankruptcy ends or five years from the date you originally became bankrupt. Some lenders have a bad reputation for providing quick cash loans. If you have these kinds of charges on your credit file it can bring down your score. Legal summons relating to debt also negatively impact your credit rating.
An often overlooked negative on your credit rating is having multiple financial applications in a short period of time. This can give reporting agencies the impression you plan on borrowing from multiple lenders, or may not be able to afford a loan, leading to a lower credit rating.
That’s why here at loan Loantec we use our unique pre-qualification tool. It allows us to assess your financial situation and find you the best deal. Without having to do credit checks or making a formal application.
How to Improve Your Credit Score in Australia
You’ll often find your credit file might have the wrong details or defaults that have been put there in error. Our Finance Technicians can investigate your credit score, remove any unjustified marks against your record and ensure your rating is the best it can be.
Lenders view your credit score as a way to assess your reliability and the likelihood you’ll repay any future debts. At Loantec, we work with more than 40 lenders and understand how to help you get the best finance possible. Even if you have a bad credit score.
Simply complete our pre-qualification form one of our Finance Technicians will help you with everything along the way.
*The information contained in this article is of a general nature only. Loantec recommends that you seek independent legal, financial and taxation advice before acting on any information in this article.