Personal credit scores explained

05 Mar Personal credit scores explained

Credit scores explained

Australia recently changed the way your credit rating is worked out. Your credit report is a detailed account of your credit history which is used every time you apply for credit or a loan. It usually contains items such as credit cards, personal loans, mortgages, store cards, mobile phones, electricity and gas contracts and rental finance.

Creditors will use a credit score to understand your current commitments and determine how likely you can make repayments on future credit based on your previous transactions. A good credit score indicates your reliability and trustworthiness as a borrower.

How is it calculated?

Your credit score is calculated based on the following:

  • how many credit accounts you have
  • the number of credit transactions shown
  • the number of loan applications listed
  • the frequency of transactions or applications
  • repayment history – specifically the number of late payments
  • any credit infringements or bankruptcy

If you have a high number of loan applications or credit transactions over a short period of time, this may lower your credit score. The longer your credit history, the more information is available to calculate your credit score.

How can I improve my score?

To improve your credit score:

  • check to make sure there are no errors reported
  • be sure to pay your bills on time
  • reduce the number of credit applications
  • get rid of the credit cards
  • pay off your debts

Once you have checked your score and made improvements, if it still isn’t looking too good you may want to try consolidating your debts. “Debt consolidation” means refinancing your debt onto the lowest interest rate possible – and setting up a realistic repayment plan to get it paid off! Of course, any debt consolidation strategies can only be successful if you cancel or cut up your credit cards and avoid running up any further debt. If you can commit to that, debt consolidation can potentially save you a lot of money.

There are a few ways that you can do this:

  • Consolidate your credit card debts into one personal loan
  • Transfer your debt onto a card offering low balance transfer
  • Incorporate the debts into your mortgage.

If your situation has negatively impacted your credit rating, you may find that you are not eligible for a loan to consolidate, can’t transfer to a new credit card or even re-mortgage.  You may find yourself in a real struggle with debt collectors chasing you and it seems like you might have to go bankrupt.

How we can help

There are alternatives even if your situation is serious.  Talk to us about the Financial Hardship obligations of your creditors, Moratoriums and restructured payment amounts and at Active Debt Specialists, we are experts at implementing the Debt Agreement* repayment option, which has no interest, stops debt collectors and your repayment is only what you can afford.

Find the right solution to help solve your credit card debt issues.

Give us a call today on 1800 085 550 for a free no- obligation confidential chat.

* Debt Agreements will affect your credit rating and conditions apply. Find out first.

 

 

No Comments

Post A Comment

Enquire Now

  1. Do you have a house or car that needs protection from debt collectors?
  2. Do you have unsecured debts of more than $10,000?
  3. Is your gross income less than $108,000?
Next

We can help you

You can call us now on

1800 085 550

Active Debt Specialists is based in WA, successfully providing debt solutions to individuals and businesses since 1998. We help thousands of Western Australians to resolve their debt, keep their family homes, continue operating small businesses and eliminate financial stress.

Or We can call you

Unfortunately, we are unable to assist you.

For further assistance we recommend you:

  • Speak to your Creditors
  • Call AFSA on 1300 364 795
  • Speak with a Financial Counsellor
< Go Back

Unfortunately, we are unable to assist you at this time.

Please contact us for assistance once you have secured a regular income.

We look forward to your call.

< Go Back

Unfortunately, we are unable to assist you.

You need to have over $7,000 in unsecured debt to apply.
For further assistance we recommend you:

  • Speak to your Creditors
  • Call AFSA on 1300 364 795
  • Speak with a Financial Counsellor
< Go Back

FREE Phone Consultation

Enter your details and we will call you.

  1. Credit cards, store cards and personal loans are types of unsecured debts. Mortgages and car loans are not.