What is a Credit Score?
A credit score is a number determined from an analysis of your loan and account history found on a credit report. It is used by Lenders as a way of seeing if you are a good risk to lend money to and the likelihood you will pay the loan back.
Credit reporting agencies collect your financial and personal information and document it on your credit report. This information is then used to calculate your credit score, which includes:
- Your personal details (such as age, length of employment and where you live)
- The type of credit providers you have used such as a bank or utility company
- The amount of credit you have borrowed
- The number of credit applications and enquiries you have made
- Any unpaid or overdue loans or credit defaults
- Action that may have been taken against you for not repaying a loan such as a Court Summons
- Personal insolvency such as bankruptcy
The credit score is usually a number between 0 and 1,000 The higher the number, the better risk you are to the Lender. The credit score will position you in one of 5 categories:
- Excellent – you are highly unlikely to have any adverse events harming your credit score in the next 12 months
- Very good – you are unlikely to have an adverse event in the next 12 months
- Good – you are less likely to experience an adverse event on your credit report in the next year
- Average – you are likely to experience an adverse event in the next year
- Below average – you are more likely to have an adverse event being listed on your credit report in the next year
Having a high credit score may help you negotiate a better deal on your loans such as lower rates and fees. We can help you obtain a copy of your credit score and even suggest ways that may increase your score. Speak to us to see what we can do for you.