If an unstable property market and tight lending conditions weren’t enough to dampen your borrowing power, did you know your credit score could be stopping you get on the property ladder or from upgrading to your dream home?
“Your credit score is a vital sign of your financial health and could see you turned down for a home loan or personal loan,” Kate Browne, personal finance expert at Finder, said.
What is a credit score?
A credit score reflects a person’s credit history and typically ranges from 0 to 1,000. Lenders will take it into account when deciding whether to approve a loan application or line of credit.
Do you know your score?
Shockingly, 14.2 million Aussies don’t even know their credit score number, or even what a credit score is.
A Finder analysis of 14,000 Australian credit reports found that Canberra residents have an average credit score of 706 – the highest in Australia.
Brisbane (679) and Hobart (664) were the capital cities with the lowest average credit scores across Australia.
Browne said Canberra residents are setting a good example for the rest of the country.
“It should come as no surprise that the ACT is also the highest income earning region in Australia,” Browne said.
According to the Australian Bureau of Statistics on average Canberrans earn the most in the country at $1,847 per week, compared to $1,460 in Tasmania.
By age, surprisingly, millennials (those aged 24-38) are the generation most likely to know their creditscore with nearly one third (32 per cent) stating in a finder survey that they know their score, compared to just 25 per cent of Baby Boomers.
Ok, so how do I improve my score?
According to Browne, here are four easy tips to improve your credit score, and get you back on course for buying your dream home.
1. Get your credit score and credit report: You can access both your credit score and report for free through Finder. Once you receive your score, you can check which credit band you fall into and review your credit report to get a more in-depth understanding of your financial position.
2. Check your report for high-risk listings: If your score is low, read through your report and keep an eye out for negative listings. This can include multiple credit enquiries in a short space of time, credit cards with high limits, multiple loan accounts and black marks such as late payments, defaults, serious credit infringements and bankruptcies.
3. Identify listings that you can improve: If you have a high credit limit that you aren’t using, you can contact your bank to lower it. If you have multiple personal loans or credit card debt, you can consolidate them under one product with a promotional 0 per cent interest rate and pay off your debt with no interest. You should also make sure you’re paying all of your bills on time and create a budget to repay any existing debts.
4. Keep an eye on your score: When you order your credit score and report through Finder, you’ll also receive updates if anything changes on your report. That way you can stay on top of your finances and any impacts on your score.
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