1 in 4 Aussies fear credit score could lead to financial rejection
- 25% of Australians fear their credit score will stop them from getting approved for a loan
- Generation Y most worried about their credit score impacting their ability to borrow
- Find out your credit score for free at finder.com.au/credit-score
19 September, 2016, Sydney, Australia – One in four Australians fear their credit score could stop them getting a loan or credit card, according to a new survey by finder.com.au, Australia’s most visited comparison website1.
While the majority of Australians (67%) don’t expect a lender to reject an application based on their credit score, it has been a reality for one in 10 of us (9%).
A credit score is based on your financial history and the risk you pose to a lender when taking out a loan.
The national survey, of 2,033 respondents, also found that 8% of Australians are complacent with ‘no opinion’ on what consequences their credit score might have on their ability to borrow.
From today, finder.com.au is now offering free credit score checks to all Australians via finder.com.au/credit-score
finder.com.au is the first independently-owned service to offer free credit score checks, complementing a comprehensive range of comparisons and guides to help Australians make informed decisions. The free credit score check doesn’t affect your credit rating.
finder.com.au has partnered with Equifax, Australia’s largest credit bureau, to connect you straight to your score while you wait. This score will be a number between 0 and 1200; the higher your score, the lower your risk to lenders.
Bessie Hassan, Money Expert at finder.com.au, says the exciting initiative aims to bring all Australians closer to financial empowerment.
“There are still many of us in dark when it comes to credit scores,” she says.
“People often don’t realise the consequences of a poor credit history until they get knocked back applying for credit. A shaky history of paying bills on time and outstanding debt directly impacts your credit score.
"Knowing your credit score allows you to apply for credit with confidence; you may be pleasantly surprised with your score. At the very least it can save you from unexpected rejection and be the catalyst for positive change."
She says some Aussies had saved for years for a home deposit only to be rejected on the mortgage application because of a bad credit rating.
“It can really be a nightmare if you put it all on the line to buy your first home, and bad money habits from the past come back to haunt you.
“The only lenders willing to take you on will be those that deal with high-risk borrowers in return for high interest."
Ms Hassan says it’s never too late to fix a broken credit history.
“The first step Aussies could make is to pay bills on time and lower unused credit card limits," she says.
“There’s no quick fix, credit scores take into account years of past behaviour, but there’s no time like the present to change your habits.”
finder.com.au’s free credit score check also provides users with tips about how they can improve their credit score. Visitors will also get a reminder every six months when they are entitled to another free credit score check.
To check your credit score for free, head to: finder.com.au/credit-score
How your credit score is calculated
Using the following information, credit providers are are able to calculate your risk and your overall credit score:
- Personal details. Including your age, time living at your current address, and how long you've been employed.
- Length of time your credit report has been active.
- Type of credit providers that you’ve held an account with, for example a bank as opposed to in store finance.
- Your credit limit or the amount that you’ve borrowed.
- The number of enquiries listed on your credit record.Frequent applications can have a negative impact on your credit score, this includes loans, credit cards, or utility accounts.
- Defaults, overdue debts, and other serious infringements or clear outs in your credit history.
- If you’ve been taken to court by your lender or had a default judgement.
Tips for improving your credit score
- Moving home? Update your contact details with your bank, utilities and other lenders so that your bills are redirected and aren’t listed as defaults.
- Ensure that you make the minimum payment on time.
- Consolidate your debt to make it easier to manage repayments and save on fees.
- Monitor your credit applications and check your credit report regularly so that you can quickly identify any applications or enquiries made as a result of identity theft.
- Only apply for credit when you need it and space out your credit inquiries.
- Arrange for a repayment plan that suits you to avoid missing payments.
State by state
- South Australian residents take out number one spot as the most fearful of loan rejection due to a bad credit score with 30% worried about it, ahead of West Australians (29%) and 25% of both New South Wales and Victorian residents.
- 10% of South Australians have been declined a loan due to their credit, ahead of 8% of NSW and 7% of Victorian residents.
- Tasmanians were the most complacent, with over 12% having no opinion on how their credit scores may impact borrowing ability, compared with 9% on average nationally.
- Generation Y (40%) were most worried about their credit score impacting their ability to borrow, compared with Generation X (31%) and Baby Boomers (11%).
- The vast majority of Baby Boomers (81%) did not have a fear of rejection for a new loan or credit card due to their credit score.
1Experian Hitwise since 2015
For further information
The information in this release is accurate as of the date published, but rates, fees and other product features may have changed. Please see updated product information on finder.com.au's review pages for the current correct values.
finder.com.au is Australia's most visited comparison website and has helped over 4.8 million Australians find better credit cards, home loans, life insurance, shopping deals and more since 2006. finder.com.au compares 250 credit and debit cards from 31 providers, over 300 home loan products, and information from 13 life insurance providers as well as online shopping promo codes, mobile phone plans, travel insurance and more. One Australian every five minutes is using finder.com.au to find better (Source: Google Analytics).