Why is a credit score important?
An Equifax score is a summary of an individual’s credit information held by Equifax and indicates how credit providers and finance/utility providers may view you when you apply for credit. A credit score is derived from the information on an individual’s credit file at a specific point in time.
A credit score is one indicator of risk. A higher credit score is considered better as it indicates a lower risk. Your credit score is important as it can be used by credit providers, such as banks and other lenders to help them decide whether to lend you money and in some cases can even impact on how much they will lend you, the terms and rate that they offer you. In recent times, some lenders have started to offer special deals on personal loans and credit cards based on credit scores.
Your credit score is important as it can provide you with a better indication of how lender may view you when you apply for credit. Credit scores may be used by credit providers, such as banks and other lenders to help them decide whether to lend you money and in some cases can even impact on how much they will lend you, the terms and rate that they offer you.
Once you know your score, you can take steps to improve it if needed, so you can choose a credit provider who may reward your good behaviour with access to better finance deals over time
Your credit score can also be used by phone companies and utility providers to help them decide whether or not to accept your application for a post-paid mobile phone, electricity, gas or water contract.
It is important to note that a credit score is only one indicator of your credit risk,that may be used by a credit provider as part of their assessment on whether or not to extend you credit. A higher credit score is considered better as it indicates lower risk. Credit providers can also use information on your credit application form, along with any other information they may have on you as an existing customer against their own lending criteria and policies.
It is important to note that the way the Equifax Score is used in practice by lenders may differ to the way it is displayed in the Equifax Credit and Identity portal. Each lender may also apply their own lending criteria and policies, and in some cases their own scores, which is why some lenders may approve your application while others will not.
Why are there different credit scores?
Different lenders and credit reporting bodies (CRBs) have different credit scores based on their own information and algorithms. A score is only as accurate as the information it is based on. A score based on minimal data could potentially lead to the wrong credit decision being made. Lenders may use one or more CRBs to help in their assessment.
As Australia’s leading credit information company, the Equifax Score is calculated using information from the most comprehensive and current credit data source in Australia . The Equifax consumer bureau has more than 16 million active consumer credit files and is widely used amongst Australian lenders.
I have a good credit score but still didn’t get a loan. Why?
A credit score is not the only piece of information a lender will look at when assessing your application for credit. The lender or credit provider may also look at whether you can afford to repay the loan based on your current income, savings and expenses and whether you have been making any current loan repayments on time.
You’ll also need to meet the lender’s internal criteria that assesses whether the lender considers you can afford to repay the loan. If you don’t meet a lender’s criteria, they may not approve the loan, no matter what your credit score is.