Over 14 million Australians may have no knowledge of their credit score despite the importance of the financial statistic in people’s daily lives.
According to a survey by the financial comparison company Finder, seven in ten respondents did not know their credit score.
Further, over 40 percent of those surveyed had never checked their credit score, while 14 percent had no idea how to do it.
Eight percent were too scared to find out the data, and the remaining seven percent did not know what a credit score was.
In addition, women were half as likely as men to know their exact score.
Amy Bradney-George, a personal finance expert at Finder, said a credit score was a measure of how well people were managing their money.
What Is A Credit Score?
A credit score is measured on a 1,000-point scale and is calculated based on a person’s history of financial activities, including the type and amount of credit they applied for in the past, their repayment history on credit accounts, information regarding bankruptcy and so on.A good credit score is considered to be 670 or higher, and an excellent score is 800 and above.
In Australia, there are three major credit reporting agencies that issue credit scores: Experian, Equifax and illion. Each has its own system of calculating credit scores.
Financial institutions will check borrowers’ credit scores when they apply for a loan. The higher the credit score is, the more likely the loan will be approved.
In some cases, additional service options could be unlocked for borrowers with a very high credit score.
Financial experts advise consumers to check their credit scores before borrowing money to see if there is a need to improve the score.
“It only takes a few minutes to check your credit score, and it can help you get on the same page as lenders. It also gives you a clear view of your financial situation, which can help you set goals for the future,” Bradney-George said.
How to Improve Credit Scores
Some people may panic when finding out they have a low credit score. However, the good news is the data is not set in stone, and there are ways to improve it.One simple way is to pay bills on time. As bills (mobile phone, energy, etc.) that are overdue for over 60 days will automatically appear on credit reports and negatively affect the score, it is necessary to ensure they are paid on time.
In addition, consumers may try lower limits on their credit cards if they rarely hit the upper threshold.
“If you have a high credit limit that you aren’t using, contact your bank to lower it,” Bradney-George said.
“If you have multiple personal loans or credit card debt, you can consolidate them under one product with a promotional zero percent interest rate and pay off your debt with no interest.”
For existing credit card bills or loans, paying more than the minimum repayment amount required each time could demonstrate to lenders that the borrower is responsible for their finance.
Avoiding having credit or loan applications rejected, using a credit card to buy things and paying the full balance on time, and regularly checking credit reports to correct inaccuracies are other known methods to raise credit scores.
