Understanding your Credit Score

Updated: Jun 17, 2019

Do you know your credit score or why it matters?

Your credit score is important as many lenders use it to understand your past credit profile. This info-graphic helps explain the basic facts you need to know about credit scores and how they might affect you.

Understanding your Credit Score

How is your score calculated?

Your credit score can be affected by a range of factors, including:

  • Numerous credit enquiries in a short time frame.

  • Nominations to be a guarantor.

  • Overdue debts and defaults (listed for 5 years).

  • Bankruptcy (listed for 10 years and under).

  • Late payments for mobile phones, electricity and gas services.

  • Interest-free store finances.

  • Court writs or judgements.


Who looks at your credit score?

These are just some of the places:

  • Banks, financial institutions and lenders.

  • Rental Agents.

  • Insurance Companies.

  • Utility providers.

  • Mobile phone services.


Your credit score is important as many lenders use it to understand your past credit profile.

It can determine your ability to:

  • Get a home loan or credit card.

  • Obtain insurance.

  • Connect electricity or gas.

  • Rent a house.


4 Facts on Defaults - Received a default notice?

Keep calm. Just because you receive a default notice, it does not mean it will be listed on your credit report.

  1. You can default on credit card payments, mortgages or even bills.

  2. Lenders issue a default notice when you fail to pay debt that is due.

  3. Legally, lenders must contact you multiple times to chase up your payment.

  4. If you still fail to repay the amount, a default could be listed on your credit file.1


Credit scores - by the numbers

  • 71% - The percentage of Australians who have never accessed their credit report.2

  • $150 - The minimum amount of debt for a consumer default notice.3

  • 60 - The number of days overdue before a consumer payment default can be listed.3

  • 5 - The number of years defaults and credit applications can stay on your report.4

  • 30% - The percentage of Australians who found mistakes in their credit file.5


Disclaimer: Original content source: Pepper Money. It is designed for publication through Accredited Brokers, to provide you with factual information only, and it is not intended to imply any recommendation about any financial product(s) or to constitute tax advice. If you need financial or tax advice you should consult a licensed financial or tax adviser. The information in the article is believed to be reliable at the time of distribution, but neither Pepper nor its accredited brokers warrant its completeness or accuracy. For information about whether a non-bank loan may be suitable for you, call us on 0412 110 118.

1.https://www.oaic.gov.au/privacy/privacy-archive/privacy-resources-archive/when-can-a-default-be-listed-on-my-credit-file

2.http://www.experian.co.nz/media-alert-two-thirds-of-australians-unaware-of-credit-reporting-improvements/

3.https://www.oaic.gov.au/individuals/privacy-fact-sheets/credit-reporting/privacy-fact-sheet-35-when-can-a-default-be-included-in-your-credit-report

4.https://www.moneysmart.gov.au/borrowing-and-credit/borrowing-basics/credit-reports

5.https://www.choice.com.au/money/credit-cards-and-loans/home-loans/articles/how-to-protect-your-credit-rating

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