Credit Score vs. Credit Report
It's important to take care of your credit so you can pursue financial goals like buying a home, starting a business, buying a car or even just getting a credit card. Whenever you apply for a credit contract, the lender will check your credit profile to see if you are a safe bet to repay the money you borrow.
Credit score vs. credit report: what's the difference?
A credit score in Australia is like a grade that summarises the health of your credit report, and how likely you are to record a default or other adverse credit events within the next 12 months. As well as a number, you might be given a score of 'Below average' (bottom 20%), 'average' (21-40%), 'good' (41-60%), 'very good' (61-80%) or 'excellent' (top 81-100%). This indicates how your credit score compares to other Australians.
Your credit score in Australia is a number between 0-1200 that represents the information contained in your credit report at a single point in time. You can check your credit score for free with our simple online form.
A credit report is a more detailed document that contains information about you, including your name, gender, date of birth, driver's licence number, address and employment history. It also contains financial information about your repayment history and any defaults, the number of credit applications you have made and any proprietorships or directorships that you have.
When you apply for a loan, the lender will check your credit score. When you request a free copy of your credit profile, you are given your credit report, but not your credit score. Some services will give you regular credit score updates when you pay to subscribe.
Potential employers may also check your credit report (but not your credit score), particularly if you work in financial services.
Where does the information in my credit report come from?
A credit report contains a record of your credit history. This is collected from a number of sources, including:
- Public records like ASIC records, judiciary records, bankruptcy and debt agreement information.
- Credit unions, banks, payday lenders, store credit providers and phone or utility providers.
Positive credit reporting became mandatory in July 2018 in Australia, and this means that banks and lenders now need to provide details including your credit limits, the types of credit accounts, date each account is opened and closed and any missed payments more than 14 days overdue.
Which do I use to apply for a loan?
Your credit score provides an instant snapshot in time to the lender when you apply for a loan.
What does a good credit score mean for me?
A good credit score in Australia makes it easier for you to obtain credit. This affects your quality of life, both now and into the future. Improving your credit score will increase the financial products that you have access to, and will save you money in the long run on interest rates and loan fees.
Your credit score ultimately affects where you may be able to live and how much you pay for your home, the types of car loans you can get, your search for employment, and your ability to start a business.
How do I improve my credit in Australia?
To maintain or gain a good score, here's what to do:
- Pay bills on time - direct debits can help with this
- Use credit only where you need to
- Limit new accounts
- Only make credit applications when absolutely necessary
Try to maintain a high credit score as a lifetime habit. It's really important that you can show lenders that you are a reliable borrower who has a good record of paying back loans.
Lifestyle is important to keeping your credit score healthy, and you should aim to keep things as stable as possible.
Staying in the same job for a decent amount of time, always having your name on contracts for your accommodation (even if you’re subletting) and being able to show proof of residency will always help your credit score.
Contact us today and speak to one of our experts if you have any questions about credit score vs. credit report or getting a loan with your credit score in Australia.
Check your credit score for free and we can help help you get the deal for your next loan. We have decades of experience helping people to get the best loans for them as well as having access to some of the best loans available on the market.