A credit score is an automated assessment that determines how risky your loan application is to a potential lender.
In the event, your credit score has caused a bank to reject your loan, do not apply for another one! Your score can be further reduced if you are rejected again, so read on to obtain tips on how to improve your credit score before applying again.
What is shown on my credit file?
Credit files are records of your credit history kept by credit reference agencies such –
- Equifax
- Illion, and
- Experian
The information included here includes details such as defaults on loans, bankruptcy, other adverse events, history of your loan applications submissions and your current & past directorship connections.
In addition to negative credit reporting data, your credit file will also contain positive information such as your on-time repayment record. This gives lenders a more accurate picture of your current situation.
Why did I fail my credit score?
Although you may be declined for a loan for a variety of reasons, the most common reason is that your credit score does not meet the lender’s requirements.
The most common causes for a failed credit score include –
- Bad credit history.
- Missed or overdue payments.
- No genuine savings.
- Instability of address or employment.
How can I improve my credit score?
Some tips for improving your credit score are –
- Pay off your credit card debt as much as possible.
- Pay all debt obligations on time, every time.
- Do not overdraw your accounts.
- Pay any defaults on your credit file and if possible, wait for the defaults to be removed.
- Postpone any plans to change jobs or living address until you apply for your loan.
- Demonstrate sound saving habits by making regular deposits to a savings account.
- Don’t apply for loans that you don’t need. You want to minimise the number of enquiries on your credit file.
How do I obtain a copy of my current credit report?
Each consumer is entitled to free credit reports once a year, made available within 10 working days of the request. You may be charged a fee if you have already obtained a report from the same credit-reporting body within the last 12 months OR if you request your report sooner than 10 working days.
All the credit reporting bodies require you to complete a form or make a written request. They will ask you for identifying information, which might include:
- Your full name.
- Your date of birth.
- Your driver’s licence number.
- Copies of identification (like a driver’s licence, birth certificate, as well as an official document with your name and address (i.e. rates notice, utility bill or bank statement).
- Your current and previous address.
- Your current employer or previous employer.
- Name of the organisation to which you last applied for credit.
- A daytime telephone number.
Equifax
You can apply for your credit report online at Credit and Identity Products | Equifax Personal or by calling 19 8332 or write a letter with the identifying information set out above and send the letter to: Equifax, GPO Box 964, North Sydney, NSW 2059.
Illion
Apply online at https://www.creditcheck.illion.com.au/auth/login/signup or complete a copy of the ‘Application for personal credit report’ and send this by post with:
- A copy of your driver’s licence, passport, birth certificate or proof of age card; and
- A copy of a document issued by an official body (such as a utility bill or bank statement).
You can send the completed form to: Illion Public Access Centre, PO Box 7405, St Kilda Road, Melbourne VIC 3004.
Experian Credit Services Australia
Apply online via https://www.experian.com.au/order-credit-report or by calling 1300 783 684.
This free service can help you identify any errors or shortcomings to be expected in your final credit score, as well as determine which information positively impacts it. However, the limitation to the free service is that you may not be provided with a copy of your credit score along with your credit file report. It’s important to note that If you request your credit report, your current contact details will then become available to any lenders, creditors or debt collectors who check your report.
It’s important to note that if you request your credit report, your current contact details will then become available to any lenders, creditors or debt collectors who check your report
How Do I know What My Credit Score Is?
Fortunately, you can sign up with the following websites to receive a free copy of your credit score:
Your details will be used to market products and services to you, but don’t worry, you can opt out at any time. Your credit score report gives you the opportunity to identify weak credit accounts and improve your credit score by focusing and improving on those weak accounts.
Note that missed payments have a high impact on your credit score and can stay on your report for up to 2 years. So if timeline is of a concern, it may be easier to approach a lender who does not use credit scoring to get a loan.
Are there any lenders that do not use credit scoring?
While most Australian lenders use credit scoring, the short answer is YES.
Speak to us first before applying for a loan if you’re concerned about your credit history. Through our experience and insight, we can approach a lender that will score your case more favourably.
To find out more on how we can help you secure the desired loan application outcome, contact us on 0499 600 789 or via email eddie@thebetterbroker.com.au