You may have heard of credit scores, but you may not know that you have more than one. In fact, you likely have several credit scores, and understanding them is key to taking control of your credit.
Why do you have multiple credit scores?
You don’t have just one credit score. There are numerous various credit scores and the businesses that create them. Despite the fact that your credit ratings are calculated based on information in your credit reports, there are many various credit scoring models, or ways to calculate credit scores.
Your credit score can depend on the credit scoring model utilized as well as which credit bureau provides the report with data.
It’s important to note that having different scores across CRBs is normal and doesn’t necessarily indicate a problem, as long as the information in each credit report is accurate. Lenders often use multiple CRBs to get a comprehensive picture of a borrower’s creditworthiness.
What are the Credit Reporting Bodies?
Not all lenders and creditors report to all three major nationwide credit bureaus. The main Credit Reporting Bodies in Australia are:
- Equifax
- Illion
- Experian
Some creditors or lenders may only submit reports to two while others might not bother reporting at all. The types of credit scores utilized by lenders and creditors can vary, depending on the sector. An auto lender, for example, may use a credit score that emphasizes your payment history when it comes to auto loans.
But did you know the difference between your credit score and your credit report?
Why your credit score is important
Credit scores are important because they show lenders how likely you are to repay a loan. The higher your credit score, the better interest rate you’ll qualify for. You have more than one credit score, and each one may be slightly different. This is because there are many factors that go into determining your credit score, and not all scoring models weight these factors equally. However, understanding what goes into your credit score can help you take steps to improve it.
A low credit score can make it difficult to qualify for loans and get favorable interest rates, but it doesn’t have to be a death sentence for your financial future. There are steps you can take to improve your credit file and increase your chances of getting approved for the financing you need. At Clear Credit Solutions, we offer a free credit file assessment so you can find out what negative items are impacting your score and if we can help remove them.
