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How Does Credit Scoring Work?

Not sure how your credit score is calculated? Read to find out what influences your rating and how to maintain a positive credit score.

Posted on: July 12, 2016

Vehicle Finance

Australian’s are often unaware of what a credit rating is, and it is quite understandable for a nation that isn’t as well versed with bad debt as countries like America. Credit scoring foremost works as a way of determining whether a bank should lend you money. By combing through information that is included on your credit history, a lender will then be able to determine if you are a reliable investment.

  • Credit card applications
  • Loan applications
  • A mortgage
  • A mobile phone or internet plan

Making sure all the information adds up in your credit history is essential to providing a sustainable business for brokers and financiers. It is in their best interests that all debts are repaid, but also yours (the borrower) – as defaulting on payments can result in a bad credit score, affecting any possible loans for up to seven years.

In Australia, your credit score is determined in a rating out of 1,200. Any score above 800 is considered reasonable, however, if it has plummeted to around 600 the rating would be high risk. When evaluating a loan application, all questions will come into factor for the credit score. Some of these highly influential aspects include where you live, how long you’ve worked at your current job, how long you’ve lived in the one premises, and past credit history.

It is also handy to note that leaving sections blank on loan applications severely affect your chance of being approved for a loan.

It is always essential to be certain that a loan is the right option for you, as the inquiry will stay on record for 5 years, tarnishing your chances of being approved later, and lenders often use more than just your scoring to determine the likelihood of you being a ‘responsible’ borrower.

We have made it possible for car loan applicants to get car finance even when the banks have said "no".

Contact our friendly loan support team here to find out more!

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