If you’ve ever had or applied for a loan, a credit card or even a phone bill in your name, you will have a credit score. Knowing what your credit score is can help you understand how much you can borrow from a bank or other lender. Understanding what can affect your credit score is also important as there might be things you can do to change to improve it. But what is a good credit score and how can you find out what yours is? Here’s some information that might help explain credit scores for you.
What is a credit score?
Banks and other lenders use your credit score to determine whether they should provide you with a loan, how much to loan you and what interest rate to charge.
Sometimes referred to as a credit rating, a credit score is given to you based on your borrowing and repayment history. Your credit score is calculated by credit reporting agencies who look at all the past and present credit you’ve had including:
- Loans you’ve had for property, personal, household or family reasons or any loans you may have been guarantor for.
- Credit cards and store cards and your credit limit on the cards.
- Credit you’ve obtained from Pay Day Lenders or facilities such as PayPal, Payin4, Klarna, StepPay or ZipPay.
- Bank accounts you’ve opened and / or closed.
What can negatively affect your credit score?
If you’re late paying your bills or loan repayments this may show on your credit file. If you have any unpaid fines or a history of bankruptcy, this will also work against you.
In addition, making loan enquiries can affect your credit score so the more times you call a bank to make a loan enquiry or submit an online form, it may appear on your credit file, which may have a negative impact on your credit score.
How can you protect or improve your credit score?
Making repayments on any loans you have when they are due will have a positive impact on your credit score as well as paying your bills on time, including all your household bills.
Showing consistent savings in your bank account will also help.
If you’re looking to get a loan, rather than enquiring yourself with various lenders, ask your GPC Broker to source some options for you so your enquiries don’t show up and affect your credit score.
What is a good credit score?
A credit score is generally a number between 0 and 1,000 with the higher your number, the better credit rating you have. According to credit reporting agency Equifax a credit score of over 800 is considered Excellent, 740 to 799 Very Good and 670 to 739 Good. Anything under this is either fair or poor. With a high credit score you’re rated as being more likely to pay back a loan and can mean you may be able to obtain a better interest rate and terms for your loan.
How can you check your credit score?
Visit free sites such as My Credit File and Check Your Credit. You’ll need to confirm your identity by providing your name, date of birth, contact address and driver’s licence number. Alternatively, when you are seeking finance through us, ask your GPC broker, they’ll be able to get a credit report for you and find out your current credit score.
To have a chat to one of our expert brokers, book in a call now.