How do I know if I have bad credit?

FinanceLoans / Lease

  • Author Don Milne
  • Published March 24, 2018
  • Word count 520

The best way to find out where your credit rating sits is to check your credit score. There's three main credit reporting agencies in Australia, and under government legislation, you are entitled to one free credit report each year.

Credit Reporting Agencies in Australia

Equifax (formerly Veda)


Dun and BradStreet

To get your credit report you'll need to provide your name, date of birth, proof of identity - this is usually your drivers licence number, and your address.

One you get your credit score, and your credit report, the next step is to find out what it means.

What Should I Aim For?

The maximum credit score in Australia is 1200. Here's how lenders rate your credit score:

833-1200 Excellent

726-832 Very Good

622-832 Good

510 - 621 Avereage

0-509 Below Average

If your score is good or higher, you are in a better position to secure finance, including car loans, a mortgage, or a business loan.

Other things will affect your ability to obtain finance, such as your income and any existing liabilities or assets that you have.

What Affects My Credit Score?

Your credit rating is affected by your financial habits. If you consistently save, you pay bills on time, and you avoid applying for new credit cards and loans then your credit score will be stronger.

It also helps to keep your credit balance low, and avoid being rejected for any loans that you apply for. If you take out a balance transfer credit card or debt consolidation loan, make sure that you do pay out the balance within the loan terms or the balance time frame.

How To Gain An Excellent Credit Rating

To avoid a poor credit rating you should avoid any defaults on your bills and loans, and don't spend more than you earn.

Getting an excellent credit rating is a little more challenging. People with an excellent credit rating have planned ahead to put their finances in order. They will usually own a home with more than 20% equity and have a middle to high income.

Some steps you can take towards an excellent credit rating include:

Don't apply for credit too often.

Review terms and conditions of your loan or balance transfer offer to ensure that you meet the eligibility requirements.

If you aren't sure about where to apply for your loan, consider using a broker who can make a full assessment of your financial profile and match you to the lender with the best available product.

Pay on time. Either set up direct debits, or keep a calendar that you stick to with your payments that fall due. Ensure there's money in your account for your credit contract bills by setting up a personal spending allowance for yourself each week.

Avoid making purchases that you don't really need.

Plan for the future. Set a long-term goal to save a first home deposit, pay down your mortgage, or boost your superannuation and investments.

Once you take control of your financial situation, you'll find that paying bills on time is easier. Finding out your credit score is just the first step in a healthy financial future.

Article provided by Positive Lending Solutions

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