credit score

Mortgage broking

A credit score is a number representing your financial history. It is calculated using the information in your credit report, which includes your payment history, the number and type of accounts you have, the amount of debt you have, as well as the length of your credit history. If you’re in the market for credit or a loan, it’s in your interest to boost your credit score as much as you can.

Credit scores are taken into consideration by potential lenders and creditors when determining whether or not to approve an applicant for credit. For example, if you’re applying for a home or business loan your mortgage broker may discuss your credit score with you. It can serve as an indication as to how likely you are to pay back the loan.

Your credit score will typically sit on a scale of zero to 1,000 or zero to 1,200, depending on the credit reporting agency. Higher credit scores demonstrate responsible past credit behaviour, which may instil more confidence in potential lenders and creditors when they are evaluating a request for credit. If you have a lower score, financial institutions will be less inclined to allow you to borrow large sums. If they do, your interest rates may be higher – as motivation to repay the loan sooner rather than later.

Here’s a general breakdown of credit score ranges from the three major credit agencies in Australia:


Credit Score Range Illion Equifax Experian
Excellent 800 – 1000 833 – 1200 800 – 1000
Very good 700 – 799 726 – 832 700 – 799
Average 500 – 699 622 – 725 625 – 699
Fair 300 – 499 510 – 621 550 – 624
Low 0 – 299 0 – 509 0 – 549


It’s important to remember that everyone’s financial and credit situation is different, and there is no perfect score that will guarantee better loan rates and terms.

Now that we’ve established what credit scores are all about, here are 5 tips to keep front of mind if you want to boost your credit score and establish or maintain responsible credit behaviours:


1. Pay your bills on time, every time.

A record of consistent and punctual payments can contribute to a stronger credit score. This includes all your bills. Late or missed payments on credit cards, mobile phones, utilities, or your rent may be reported to credit agencies, which will likely negatively affect your credit scores. If you’re having trouble with paying a bill, contact the service provider immediately to ask about alternative arrangements or payment plans. Avoid skipping payments, even if you’re contesting a bill. Creating a monthly budget and scheduling automatic payments for bills and other repayments could help you avoid late or missed repayments.


2. Pay off your debts promptly.

Again, having evidence of prompt repayments will contribute to a strong credit score. On the other hand, making late payments can damage your credit. Although paying off a debt can initially cause scores to dip temporarily, in general you could see an improvement in your credit as soon as one or two months after you pay off the debt.


3. Keep your credit card balance below the limit.

A higher balance compared to your credit limit may negatively impact your credit score. Keeping your balance low with consistent and on-time repayments will look good on your credit report. Limit new applications for credit or loan products where you can and if appropriate, consider lowering the limit on any credit cards you have. This will put a firmer limit on the amount of debt you can accrue.


4. Apply for credit cautiously.

Applying for multiple credit accounts within a short period may have a negative effect on your credit score. Whether you are approved or not, your application for a new credit or loan products will be visible on your credit report. Multiple applications for credit within a short time can flag to lenders that you are under credit pressure.


5. Check your credit reports regularly.

It could be worth checking your credit report carefully to ensure all the information listed is accurate. If your credit report does contain incorrect information, it could be having a significant impact on your overall credit score. You’re entitled to a free copy of your credit reports every 12 months from each of the three nationwide credit agencies by visiting www.annualcreditreport.com. Checking your own credit reports won’t affect your credit scores.

By cross-referencing your credit report against bank statements and other financial documents, you may be able to spot inaccuracies on your credit report. In that case, you can contact the credit provider or the credit reporting body and ask them to amend your report. This could definitely help you boost your credit score.


If you’re interested in knowing more about credit scores, speak to the expert Geelong Mortgage Brokers at The Hrkac Group. when it comes to obtaining a home loan or business loan – whether it’s to purchase a home or refinance/consolidate your debts or purchase assets – the Geelong based brokerage team is there to help you with practical, effective financial advice.

We listen, we understand and we know what the best solution for your particular needs is. Our honest, knowledgeable Geelong Mortgage Brokers will give you the confidence to negotiate for your future so together, we can develop and maintain your wealth. Make an appointment today via contact us, or phone (03) 5221 2355.