Understanding Your Credit Score Empowers You to negotiate a better deal on your loans.

Understanding Your Credit Score Empowers You to negotiate a better deal on your loans.

Definition

According to GetCreditScore, a credit score is a number that is calculated based on the information in your credit report, which helps credit providers know how responsible you are to lend to, and whether you have the endurance to pay them back..

GetCreditScore features the Equifax Score, which is used by hundreds of lenders and credit providers in Australia.

Remember that credit scores are dynamic and are likely to change over time. I had my credit score change every time I applied for a loan. It has dropped from 998 to 725 at the time of writing this article

What is the score ranges for the Equifax Score?

The higher your Equifax Score, the better your credit profile and the better you may appear to credit providers.

Below are the Equifax rankings to help you understand your relative position and credit strength against other Australians.

Your credit score will never factor in personal information like your race, gender, religion, marital status or national origin.

EXCELLENT – 833-1200 – You’re in the top 20% of Equifax’s credit-active population, suggesting it’s HIGHLY UNLIKELY that an adverse event could harm your credit report in the next 12 months.

Your odds of keeping a clean file are 5 times better than Equifax’s average population.

VERY GOOD – 726-832 – Your EquifaxScore suggests it’s UNLIKELY that you will incur an adverse event in the next 12 months that could harm your credit report.

Your odds of keeping a clean credit report are 2 times better than Equifax’s average credit-active population.

GOOD – 622-725 – Your EquifaxScore suggests it’s LESS LIKELY you will incur an adverse event that could harm your credit report in the next 12 months.

Your odds of keeping a clean credit report over this period are better than Equifax’s average credit-active population.

Consolidate expensive debt into a low-interest loan with fixed repayments.

AVERAGE – 510-621 – If your EquifaxScore is between 510 to 621, your credit score range is Average.

Your EquifaxScore would suggest it’s LIKELY that you will incur an adverse event such as a default or bankruptcy in the next 12 months.

If you’re in hardship, seek out a financial adviser or work out a payment plan with credit providers.

Accessing your personal credit score is your right and an important step on your way to financial health.

This was the first step I started to explore and rebuild my credit rating before thinking of investing in real estate.

It gave me the opportunity to review hundreds of different product option available on the market in Australia and New Zealand.

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