Home loan pain could be eased by knowing one number

A shocking number of Aussies admit they don’t know what their credit score is.

Millions of Aussies admit they are clueless about one of the more important numbers in their financial lives: their credit score.

A staggering 70 per cent of Aussies – equivalent to 14.2 million people – don’t know their credit score, according to new research from Finder.

This comes as banks, like Westpac, have made changes to their loan-servicing policies.

While some lending criteria have been eased, customers were in some cases required (among other things) to have a credit score of above 650 to qualify for a buffer refinancing loan.

Knowing your credit score could help you ask for a lower home loan rate or even get certain fees waived.

You could even be able to borrow more money, but it would still depend on your other financial details.

And if you’re a renter, your credit score could put you at the top of the list for landlords and real estate agents if they check it as part of their screening process.

What is a credit score?

Your credit score is a number between zero and 1,000 that lenders use when deciding whether to give you a loan or credit card. The higher your score, the more likely you are to be approved.

A Finder survey of 1,081 respondents revealed almost half (41 per cent) of Aussies had never checked their credit score, while 14 per cent – or 2.8 million people – were clueless about how to check it.

Almost one in 10 (8 per cent) Aussies said they were simply too scared to find out.

The data found men were almost twice as likely as women to know their exact credit score.

Finder personal finance expert Amy Bradney-George said your credit score was a measure of how well you were managing your money.

“If you’re planning to purchase a home, apply for a credit card, or take out a loan for a car, your credit score is a vital part of the process. It can even help you negotiate the best interest rate and loan terms,” Bradney-George said.

“It only takes a few minutes to check your credit score, and it can help you get on the same page as lenders. It also gives you a clear view of your financial situation, which can help you set goals for the future.”

Why do I need to keep track of my credit score?

Bradney-George said it was important for Aussies to get on top of their credit score, and keep monitoring it for changes.

“If your score is low, read through your credit report and keep an eye out for negative listings. This can include multiple credit enquiries in a short space of time, credit cards with high limits, or multiple loan accounts.

“Details of any late payments, defaults, serious credit infringements and bankruptcies are also red flags and can have a bad effect on your credit score. You can then identify the listings you’re able to improve.”

Bradney-George said your credit score could also serve as a tool to keep you safe from identity theft.

“An unexpected drop in your credit score, or declined credit applications, can be a sign that your data has been compromised,” she said.

 

article from: au.finance.yahoo.com