understanding credit score and credit report

Understanding your credit score and credit report

08 Jun, 2018

Why is your credit score important?

What are your financial goals? Perhaps it’s the security of owning your dream home, perhaps it’s taking on the challenge of running your own business. Maybe you’re looking to get a new phone contract. Whatever your definition of success, checking out your credit report is a good first step in pursuing it.

A credit report provides one picture of your personal credit history. When you apply for credit, your lender will look at your credit report to help them assess your credit worthiness.

You can access your credit report and credit score through Monefly for free, because we believe you should have the power to make the right financial decisions for you. Thanks to our credit data partner Experian you can access this information updated every month so that you can see how you’re tracking overtime.

 

What is a credit score?

Your credit score is a number that is calculated based on the information in your credit report, which helps credit providers know how responsible you are to lend to, how much to lend to you and can also influence what interest rate is offered to you. Your Experian Credit Score is a number between 0 and 1000 that represents your credit worthiness. The higher the score, the better it is.

 

How is your Credit Score calculated?

Your credit score is calculated based on the information on your credit report and it may or may not change as that information changes overtime. There are key attributes that are used to generate your credit score such as:

  • The type of credit provider who have made enquiries on your report
  • The type of product you have applied for
  • Your repayment history
  • The credit limit of each of your credit products
  • Credit enquiries you have made

However, your credit score will never factor in personal information like your race, gender, religion, marital status or national origin.

 

What information is on my Credit Report?

You’ve been paying bills for a long time, and you’ve paid them on time. This is the kind of information that lenders are looking for when deciding whether or not to approve your credit application. Your Credit Report provided by our partners at Experian includes:

  • Your name
  • Date of birth
  • Your known addresses
  • Information about any credit applications you’ve made
  • Information about your current credit providers and how much you owe
  • Details of your payment history
  • Whether you’ve been issued with a default notice
  • Details of any fraudulent claims you might have made
  • Bankruptcies or successful court actions taken against you
  • Information about lenders who have reviewed your credit file
  • As well as your credit score of course

 

What is Comprehensive Credit Reporting (CCR)?      

Our credit data partners use a comprehensive credit reporting system, which allows for the inclusion of additional information on your credit report which may include the following:

  • Repayment history for credit accounts such as credit cards, home loans and personal loans
  • Whether the repayment was made on time or not
  • The type of credit account opened
  • The date the credit account was opened and/or closed
  • The name of the credit provider and whether they are a licensee
  • The current limit on the credit account

The CCR system not only reports on negative information such as credit applications, defaults, overdue payments, bankruptcy and court judgments. But also records positive information such as a history of making regular payments on time, repaying a loan early or closing unused accounts.

This can help borrowers demonstrate their creditworthiness and ultimately be rewarded with a better deal from lenders. Starting from 1 July, 2018 the CCR system will be mandatory for all lenders.

 

How to improve your credit score

Improving your credit rating starts with looking at your current financial situation and looking for ways to improve it. As your financial circumstances improve your credit rating will improve. Getting into a good credit position before you next apply for a loan can help increase the likelihood of you getting approved. You can improve your credit score by:

  • lowering your credit card limits
  • consolidating multiple personal loans and/or credit cards
  • limiting your credit enquiries
  • making your repayments on time
  • paying your rent and bills on time
  • paying your mortgage and other loans on time
  • paying your credit card off in full each month

 

How can you find out your credit score for free?

If you haven’t already, create an account here. It’s simple, safe and 100% free to receive your credit score and comprehensive credit report.

 

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