Understanding the credit health of you and your business. Know your credit score!

Depending on how COVID-19 has impacted you or your business, it might be more important than ever to know your credit score.

The reason why your credit score is important is because it could influence how financiers and other credit providers (such as suppliers of goods or services) assess you as part of their credit processes. At PMG Finance, we can assist you in accessing a copy of your credit score and provide tips on how to manage it.

How is your credit score determined?

Credit scores are calculated by credit reporting bodies (“CRBs”) within Australia. The credit score itself is based on an algorithm that reviews information received from various credit reporting entities (such as financiers and utility providers), regarding patterns in your credit history.

It is important to note that a credit score is only one indicator of your credit risk.

What is the credit score range?

Your credit score will fall within a range from 0 to either 1,000 or 1,200, depending on which CRB is undertaking the calculation. For example, with Equifax, a “good” credit score is usually above 622, a “very good” score is above 726 and an “excellent” score is above 833.

What impacts negatively upon your credit score?

  • Numerous applications to different credit providers within a short time period reported on your credit file
  • Defaults, serious credit infringements, bankruptcies or court judgements

Other characteristics that can also affect a credit score;

Personal details contained in your credit file; including your age, employment stability, and length of time at current address.

If you are a director or owner of a company or business, your credit score will also consider the location of your business, the length of time your business has operated at its current address, and credit history information contained in the commercial section of your credit report.

Sometimes, your credit score might be negatively impacted by factors beyond your control.  For example:

Information recorded on your credit file that is not correct – This can include when a CRB reports a payment default in your credit file that should have been recorded against another credit file. Once found, such errors are easily fixed through contacting the CRB concerned.

Identity crime – Your identity is stolen and credit enquiries are made against your credit file without you knowing.

According to the Australian Institute of Criminology (AIC), the annual economic impact of identity crime exceeds $2 billion. A survey by the AIC found that 1 in 4 Australians have been a victim of identity crime at some point in their lives. The reality is that often people don’t realise their identity has been stolen until it’s too late. By being on top of your credit score you can spot changes in your file, including anything out of the ordinary. This may enable to you detect fraud you wouldn’t usually see and correct it before it has a major impact upon your financial standing.

How do you check your credit score and that information is correct?

The main CRBs in Australia are Equifax, Ilion and Experian. The Commonwealth Government’s Moneysmart website provides links to obtain a credit report – and the good news is that in most cases this is free:

For a small fee, you can have a CRB advise you every time there is any activity on your credit file.

What happens to your credit score if you enter into a payment deferral due to COVID-19?

Your credit rating should not be affected if your bank gives you a repayment deferral because of COVID-19. Refer to the Australian Banking Association website for more details: )

If you need any further information on credit scores, please do not hesitate to make contact.

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