At NGS Capital Partners, we can help you make your financial dreams come true, and so we’ve used our expertise on loans and lenders to create this credit score guide to help ensure you’re in the best position before applying.
If you’re over 18 and have applied for a form of credit (eg. a phone plan), you’ll likely have a credit score.
Here are our top tips for understanding your credit rating.
1. How credit scores actually work
Not knowing your credit score and not being sure of who to ask is a common problem, but don’t worry it is an easy one to solve.
Your credit score is located within your credit report which you can access online and is out of a possible 1,200, depending on the reporting agency.
Credit reports play a huge role in determining interest rates and your eligibility for a loan.
If you’re over 18 and have ever applied for credit, you should have a credit report.
“Applying for credit” can mean getting a postpaid phone plan or applying for a credit card, for example.
Credit providers like banks and your phone company have automated processes that send information to reporting agencies who make and update your credit report.
These reports can detail things like:
- You name, DOB and address (current and past)
- Enquiries (when you’ve formally applied for credit)
- Total debt you owe and their details
- Repayment history
- Defaults
- Any business relationships you might have
- And, your credit score
Like your score on an exam in school, the higher your credit score is, the better.
- Each time you do something good, like make a scheduled repayment, it’s recorded and can increase your credit score.
- And, each time you do something not-so-good, like miss a repayment, it’s also recorded and can lower your credit score.
Generally, “younger” credit scores take bigger hits than “older” ones, meaning that a 22 year old’s credit score is more delicate than a 50 year old’s (assuming they both generated a credit report at the same age).
Feel free to reach out to us to chat to one of our experts about your credit report, credit score and all the specifics if you need. We’re here to help.
2. Where to get your credit report and credit score
Viewing your credit score might sound like a big step but don’t worry – simply viewing yours won’t affect it at all.
You can get a copy of your credit report from reporting agencies like Equifax but asking for multiple reports or instant copies can attract fees.
3. What the scores mean and what lenders want to see
So, what is a good score? What’s not-so-good and what’s average? Check the guide below.
4. How to raise your credit score
“Sometimes, reporting agencies or financial institutions make mistakes”
Now that you have your credit score handy and you know how it stacks up, you might want to get it even higher – and we totally understand why.
It goes without saying that a higher credit score opens advantages like:
- Lower rates
- Higher chances of approval
- Higher loan amounts
- More lenders and more products to choose from
- More options like older or unique vehicles, debt consolidation and personal loans
Here are a few things you can do to get your score up:
5. Things to avoid
You probably won’t be surprised to learn that there are things that can knock a credit score down, so here are the main ones we recommend avoiding:
Defaults
These occur when a repayment on a loan is more than 60 days late and totals more than $150. Defaults can result in large portions of a credit score being wiped out.
You’ll know if you’re late on a repayment and heading to a default because the lender must send at least two written notices to your last known address.
Defaults remain on a credit report for five years so are definitely worth avoiding!
Late bill payments
Electricity bills, water bills, phone and internet bills – we all have a lot in life and paying them late can also negatively affect your credit score.
Using an automatic deduction can help with these payments – just make sure you have funds in your account.
Enquiries
Did you know that formally applying for credit can lower your score? That’s regardless of the outcome too. These applications are called “enquiries” and are recorded on your credit report each time you apply directly to a lender (eg. a bank).
Enquiries lower credit scores, especially when for large amounts or multiple in a short period of time.
Word to the wise: be very careful about applying directly with multiple lenders.
We are not a lender so our experts are able to match you with the right lender for you – without making any enquiries until you’re 100% happy with the details.
Payday loans
These are fast cash loans of less than $2,000 and, as per their name, are designed to tide someone over until their next payday in the event they’re short on funds.
Making a payday enquiry can reduce a credit score and dramatically reduce your chances of approval.
Also, payday loans often come with huge interest rates (up to 48%) plus large fees. If you’re looking at loans, make sure to compare amounts, loan terms and interest rates to get an idea of figures.
Court judgements
This means losing a court case and having a judgement against you. For example, a car accident where it’s ruled you have to pay the other driver.
These are recorded on your credit report and can lower your credit file.
The same goes for bankruptcies too which can dramatically lower a credit score.
The next step is knowing your options
We now know that credit scores play a huge part in getting a loan so finding out your score might help unlock your options and make your next steps easier to understand.
We can help match your situation and needs to the perfect loan product from our huge range of lenders, including the ‘big 4’ banks.
Reach out to the team to find out your potential options – simply finding out won’t affect your credit score.
Get in touch with the team today
If you still can’t find what your after, contact us!
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