Millions of Aussies are clueless about one of the more important numbers in their financial lives, according to new research by Finder.
A recent Finder survey of 1,057 respondents revealed that 73% of Australians – equivalent to 14.6 million people – don’t know their credit score.
The research shows almost half (48%) of Australians have never checked their credit score, 7% are too scared to check, and 6% don’t know what a credit score is.
A credit score is a number that determines how credit-worthy you are – it's one of the factors that lenders use when deciding whether to lend you money.
It's usually a number between 0 and 1,000.
How important is your credit score?
Amy Bradney-George, a personal finance expert at Finder, said "knowing your credit score is more important than ever before."
She further commented:
"It isn’t just a number – your credit score is a measure of how well you're managing your finances.
Whether you are buying your first home, applying for a credit card, or taking out a loan for a car, your credit score can help you understand how banks see you – and your chance of getting the loan.
You can also use it as a tool to help keep you safe from identity theft."
Bradney-George said it was important to be extra vigilant in the days and weeks following the Optus data breach:
“An unexpected drop in your credit score, or declined credit applications, can be a telltale sign that your data has been compromised.
Keep an eagle eye on the transactions on your bank statement and credit card – the sooner you spot any suspicious activity the quicker you can put a stop to it. Start by contacting your bank or lender.”
How to check your credit score?
Finder’s data shows men (11%) are almost twice as likely as women (6%) to know their exact credit score.
More than 1 in 10 Australians (13%) admit they don’t know how to check their score.
The research also found just 8% of Aussies know their score exactly, while 1 in 5 (19%) have a rough idea.
Bradney-George said the good news is that it is easier than ever to access your score for free.
The three credit reporting bureaus in Australia offer a copy of your credit report every 3 months if you request it online or over the phone.
Tips to check and improve your credit score
- Get your credit score and credit report. Once you receive your score, you can check which credit band you fall into and review your credit report to get a more in-depth understanding of your financial position.
- Check your report for high-risk listings. If your score is low, read through your report and keep an eye out for negative listings. This can include multiple credit enquiries in a short space of time, credit cards with high limits, multiple loan accounts and black marks such as late payments, defaults, serious credit infringements and bankruptcies.
- Identify listings that you can improve. If you have a high credit limit that you aren't using, you can contact your bank to lower it. If you have multiple personal loans or credit card debt, you can consolidate them under one product with a promotional 0% interest rate and pay off your debt with no interest. You should also make sure you're paying all of your bills on time and create a budget to repay any existing debts.
- Keep an eye on your score. When you order your credit score and report through Finder, you'll also receive updates if anything changes on your report. That way you can stay on top of your finances and any impacts on your score.
