What’s a credit score and how can you improve yours?
If you’re planning to apply for a home loan or another form of credit, it’s important your credit score is in good shape. Not sure what a credit score is, or how you can improve it?
Your Equifax credit score is a number between 0 and 1,200.
What is a credit score?
Your Equifax credit score is a number between 0 and 1,200. It uses the information on your credit report at a point in time and translates this into a numerical figure that indicates your creditworthiness. The higher the number, the less risky you are seen to be by credit lenders, and the more likely they are to grant you the credit you’re applying for – whether that be a home loan or a credit card.1
How is it calculated?
Equifax sources information from credit providers and public record information, such as court writs and judgements relating to credit, to generate your credit score using a special algorithm that gives weighting to different variables. We use this algorithm to compare your credit behaviour to the rest of Australia’s population.
The higher your credit score, the more likely it is that providers will grant you credit.
What affects your credit score information?
The important thing to bear in mind is that your credit score can fluctuate. So if your credit behaviour improves then your score can change to reflect this. Your credit score is affected by factors such as:
- Your repayment history
- Applications you’ve made for credit
- Unpaid debts or defaults
- Adverse information like court writs and judgements
- Credit limits
- Personal information
- The age of your credit report
How can you improve your credit score?
There are a number of ways you can improve your credit score:
- Check your Equifax credit score and get a copy of your credit report. That way, you can see what it is, and whether you need to take action to improve it.
- Pay off your debts and close your credit card accounts, refinancing or consolidating them to make it easier to pay off.
- Pay your mortgage, personal loans, credit cards, phone and utility bills in full every month.
- Only apply for credit when you need it – shopping around for credit, making lots of applications in a short amount of time can negatively impact your credit score.
