by LatitudeProperty 
Before You Invest What Is Your Credit Score?
Why It Matters, how to Check Yours for FREE and what you can do if there are inaccuracies on your credit report.
Before you apply for any credit it is important to check and understand your credit report so you can take action before the lenders review your credit report.
Having a clean accurate credit report will save you time and grief during the credit process.
What is a Credit Score?
A credit score is one tool lenders use to determine your viability to receive and manage credit.
Your credit score is a rating that quickly gives lenders an indication of the health of your financial history.
Your credit score can significantly impact your financial freedom. Maintaining a good score can simplify the process of being approved for loans, while a poor score can hinder your ability to access necessary funds.
What is a Credit Report?
A credit report is paired with your credit score and gives a comprehensive overview of your finances, including credit lines and payment history and can include open and closed accounts including trading accounts, credit cards and personal loans.
Your credit score condenses this information into a number between 0 and 1000 or 1200 depending on the reporting agency, indicating your risk as a borrower.
Why Your Credit Score Matters?
If you’ve ever applied for a credit card, personal loan, or home loan, you understand the importance of a good credit history. In general, if you are good at managing money, and paying your bills, loans and credit cards on time you should have a healthy credit score. Whereas if you are always late with paying your bills this can negatively affect your credit score.
Who is Equifax & Illion?
Equifax and Illion are private reporting agencies.
If you apply for credit or fall behind on a payment your lender may report this to both Equifax & Illion.
Credit reporting agencies act as a central hub where lenders report credit activity and anyone with permission can review your credit health and determine your credit risk.
When you apply for credit, whether that be a car loan, personal loan, credit card or mortgage in almost every case that lender will use Equifax or Illion to review your viability in receiving credit.
Key Factors Influencing Your Credit Score.
Understanding the factors that contribute to your Credit Score can help you manage and improve it. Here are some key elements that are considered:
Type of Credit Provider: The type of credit provider enquiring about your Credit Report can affect your score. Different providers carry varying levels of risk. For instance, applying for credit from a bank may be seen differently than applying from a store finance provider, hire-purchase company, or utility company. Research indicates that lenders in certain industries, such as non-traditional lenders, may present different risk levels compared to traditional banks or credit unions.
Type and Size of Credit Requested: The type of credit and the amount requested in your applications also impact your Equifax Credit Score. Different types of credit, such as mortgages, credit cards, personal loans, and store finance, come with varying risk levels. The size of the loan or credit limit requested can further influence your score.
Number of Credit Enquiries and Shopping Patterns: Each time you apply for credit and a provider reviews your report, an enquiry is recorded. This includes applications for loans, mortgages, and utilities. Frequently applying for credit from multiple providers in a short period can negatively affect your score, signalling higher risk compared to infrequent applications with a few providers.
Directorship and Proprietorship Information: If you are a director or proprietor, this information on your Credit Report can influence your score. It’s important to review both the individual and commercial sections of your credit report if you hold such positions.
Age of Credit Report: The length of time since your Credit Report was created can affect your score. A newer credit file may indicate a different risk level compared to an older, more established report.
The Pattern of Credit Enquiries Over Time: The distribution of credit enquiries throughout the life of your credit report matters. A newer credit file with many recent enquiries may present a different risk profile than an older file with fewer enquiries.
Your Personal Details: Personal factors, such as your age and stability (e.g., duration of employment and residency at your current address), are considered in assessing credit risk. These details can influence your Equifax Credit Score.
Default Information: Defaults on your personal or business Credit Report, such as overdue debts, serious credit infringements, or clearouts, can negatively impact your score. Conversely, a lack of default information can positively influence your score.
Court Writs and Default Judgements: The presence of court writs or default judgements on your credit report is a sign of increased risk and can lower your score. The absence of such information can indicate a reduced risk level.
Commercial Address Information: Details such as the location and the duration of occupancy at your current business address are measures of stability and can impact your Equifax Credit Score.
By understanding and managing these factors, you can take steps to improve your Credit Score and enhance your financial health.
Understanding Credit Score Ratings.
Your Credit Score rating helps gauge your level of risk compared to the Australian credit-active population. These ratings are based on historical data that assesses the likelihood of an adverse event, such as a default, court judgment, or personal insolvency, appearing on your credit report within the next 12 months. This assessment is crucial in determining your potential ability to repay future credit.
Below Average: There is an above-average likelihood that an adverse event will be recorded on your credit report within the next 12 months.
Average: There is an average likelihood that an adverse event will be recorded on your credit report within the next 12 months.
Good: An adverse event is less likely than average to be recorded on your credit report within the next 12 months. The odds of no adverse events occurring are better than those of the average population.
Very Good: It is unlikely that an adverse event will be recorded on your credit report within the next 12 months. The odds of no adverse events occurring are more than twice as good as the average population’s odds.
Excellent: An adverse event is highly unlikely to be recorded on your credit report within the next 12 months. The odds of no adverse events occurring are more than five times better than the average population’s odds.
Your Credit Score is calculated at a point in time and will change each time new information is added to your Credit Report.
Credit reporting agencies regularly review the credit scores of the Australian credit-active population and adjust the ratings to reflect population and economic changes.
How to check your Credit Score or Credit Report for FREE!
Illion offers individuals a FREE credit score and credit report.
‘Click Here’ to access your FREE Illion Credit Report & Credit Score
Equifax offers individuals a FREE credit report every three months although if you want to also receive your credit score they will want to charge you.
‘Click Here’ to access your FREE Experian Credit Report
Why You Should Care About Your Credit Score.
Access to credit is crucial for significant investments like education, business capital, or homeownership. A good credit score enables you to seize opportunities and secure these investments. Take care of your Equifax score now, and it will support your financial goals in the future.
Why checking your credit report regularly can save you from fraud.
Whenever someone applies for credit it will be reported to the various credit reporting agencies. This includes if someone fraudulently applies for credit under your name. Therefore regularly reviewing your credit report for suspicious marks or accounts is critical in staying safe from fraudulent activity.
What if there are inaccuracies on your credit report?
So you have downloaded your report and you see some information on there that is inaccurate. Maybe a default or inaccurate negative marks. All lenders self-report credit incidents to the reporting agencies and incorrect information can and does get reported. This can inversely affect your ability to receive credit now or in the future.
Don’t worry help is available, you can use a third-party company like ‘Credit Fix Solutions’ to review your situation and work towards removing negative marks on your credit report.
For more information on ‘Credit Fix Solutions’ please ‘Click Here’
Conclusion
Your credit score and credit report play a crucial role in your financial well-being, impacting your ability to secure a mortgage, loans, credit cards, and other forms of credit.
By understanding what these scores mean and the factors that influence them, you can take proactive steps to maintain or improve your financial standing.
Regularly checking your credit report is essential not only for staying informed about your credit health but also for protecting yourself against fraud.
Taking care of your credit score now can pave the way for better financial opportunities in the future. So, stay vigilant, manage your credit responsibly, and regularly review your credit report to maintain a strong financial foundation.
The first step to investing in property is understanding your borrowing capacity this includes checking your credit report.
If you would like to know more about your borrowing capacity and have a better understanding of how much you can borrow please email us at info@latitudeproperty.com.au
To review all our available investment properties please visit www.latitudeproperty.com.au
