Understanding Your Credit Score: What Does it Really Mean?

Credit Score

Getting to know your credit

If you don’t know much about your credit score, you’re not alone. Credit scores and credit reports can be very confusing, especially if you haven’t had much experience borrowing money before. To help clear up a few things, we’ll walk you through everything you need to know about credit scores. So, whether you want to know how to improve your credit score or how to check your credit score rating, keep reading. 

What is a credit score?

A credit score is a numerical expression that lenders use to evaluate a consumer’s creditworthiness. Your credit score usually ranges from 0 to 1,000 or 1,200 and the higher the score the better. Although ratings vary between credit reporting agencies, the general breakdown is as follows:

Rating

Meaning

Score

Excellent

You are highly unlikely to have any adverse events harming your credit score in the next 12 months

833 – 1,200

Very Good

You are unlikely to have an adverse event in the next 12 months

726 – 832

Good

You are less likely to experience an adverse event on your credit report in the next year

622 – 725

Average

You are likely to experience an adverse event in the next year

510 – 621

Below Average

You are more likely to have an adverse event being listed on your credit report in the next year

0 – 509

Ultimately, your credit score helps lenders decide whether or not you are eligible for a personal loan, how much they should lend you, and sometimes what interest rate they will offer you.

How is a credit score calculated?

Your credit score is calculated by one of the three credit reporting agencies that lenders are required to report to:

These agencies keep a record of your credit accounts and other details which they then use to work out your credit score. This is known as your credit report. According to ASIC’s MoneySmart website, a credit score is calculated by assessing:

  • Personal details
  • Type of creditors you have used
  • Amount of credit
  • The number of applications and enquiries
  • Any unpaid or overdue credit or loans
  • Any debt agreements or bankruptcy agreements

What is my credit report?

Your credit report is a record of your credit history kept by credit reporting agencies. The type of information you will typically find in your credit report includes:

  • Personal details – Your name, date of birth, current and past addresses, employment and driver’s licence number;
  • Joint applicant – A joint applicant’s name will appear if you applied for the credit with another person and both your names appear on the credit card contract;
  • Credit cards – Information about the credit cards you hold;
  • Arrears brought up to date – Any debts that were unpaid and overdue and have now been paid or settled;
  • Defaults and other credit infringements – These could be utility bills or loan payments which are 60 days or more overdue and where debt collection activity has started;
  • Credit applications – Any credit you’ve applied for including loans you have been the guarantor on. (Find out how guaranteeing a loan can affect your credit report.)
  • Debt agreements – Any bankruptcies, court judgements, debt agreements or personal insolvency agreements in your name;
  • Repayment history – Your repayment history on credit accounts like your home loan, personal loans or credit cards, has been collected from December 2012. The repayment history information includes: the date your credit payments were due, whether or not you made the payments by the due date (no payment or partial payment by the due date are both considered missed payments), and the dates you made any missed payments (but not the amounts that were missed).

How do I find out my credit score Australia?

If you’ve been googling ‘what’s my credit score’, there are a few companies that can give you a free copy of your credit report:

It is important to remember that you can get varying results from different companies. This is because each agency has different ways of calculating your credit score. Your finances are also prone to change month to month. 

Why should I keep my eye on my credit rating?

Not only does your credit rating fluctuate as your circumstances change, but being diligent can help protect you from identity fraud. Checking and keeping an eye on your credit report can ensure your information is correct and that you have made all the enquiries and listings on the report.

What do I do if the information on my credit report is incorrect or fraudulent?

You can ask for your credit report to be updated or changed if a listing is incorrect, free of charge.

If you do not agree with what is on your credit report you can ask for additional comments to be made. To do this you need to contact the reporting creditor to ask them to remove the report. If your creditor won’t release the report then you can speak with your relevant Ombudsman.

Although credit scores and credit ratings all sound a little scary, it is important to remember that knowledge is power. Before you submit an application for a personal loan it is essential that you are aware of your credit score and the baring this could have on your ability to get a loan. 

Where can I get a personal loan with bad credit?

Looking for a personal loan but worried bad credit could stand in your way? At Nifty, we look at more than just your credit score. We don’t think a mark on your credit score from up to 7 years ago should stop you from getting a loan today. So, our team will focus on how you are going to repay your loan rather than focussing on the past. 

We’ll assess factors such as income, spending habits and pre-existing financial commitments to determine whether or not a personal loan is a responsible financial decision. Nifty is determined to make safe, reliable and fast loans available to all Australians. So, don’t waste hours googling ‘how to improve credit score’, ‘ loans for bad credit score’ or ‘low credit score loans’. You could apply with Nifty today and have an outcome in just 60 minutes!* 

*If you apply during AEST business hours. 

Who is eligible? 

You’ll be pleased to know that we keep our application criteria as simple as possible at Nifty. Here’s what you’ll need to meet if you’d like to submit an application for a personal loan today:

  • All applicants must be over the age of 18;
  • You must have received some type of regular income for the last 90 days into a bank account that is your own;
  • Applicants must have an active mobile phone number and email address that we can contact you on; 
  • Use internet banking.
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Will Nifty check my credit score? 

Yes, in most cases our team will conduct a credit score check when you apply for a personal loan with Nifty. Nifty is proud to be a responsible lender. That means we are committed to providing applicants with the best loan possible for their individual circumstances. 

Although we will conduct a credit check when you apply for a personal loan, this will not be the only determining factor. Our team will take a look at your income, spending habits and pre-existing financial commitments to determine whether or not a personal loan is right for you. At Nifty, we love giving Aussies the best chance possible at the loan they deserve. 

What documents will I need to show Nifty? 

If you’re ready to submit an application for a personal loan with Nifty you’re probably wondering what documents you’ll need to provide us with. Check out the following: 

  • Personal details like your online banking & employment info; 
  • An active email address and mobile number;
  • The reason you are applying for the loan; 
  • Your MyGov details (if you are receiving Centrelink payments);
  • Employer and contact details.

If you have questions regarding the requirements for application, you can get in touch with the team or head to our FAQ page for more information. 

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