How is my credit score calculated?
Your credit history is used to determine your credit score and is one of the tools used by lenders to understand your track record of repaying debt as part of assessing your credit application.
There are a number of factors that determine your credit score.
For example:
- The number of times your have applied for credit such as credit cards or loans;
- The type of credit you applied for such as a home loan, personal loan, credit card etc
- Payment defaults. Unpaid debts such as overdue bill payments that are more than 60 days overdue. Do your best to avoid payment defaults as they can stay on your credit report for up to five years and do not disappear after you pay the bill.
- Payment history, which shows if you paid your bills on time or missed payments.
- Adverse information like court writs and judgments
Your credit score is then calculated on this data and is based on a five-point scale - the higher the number, the better your credit score is. This score allows lenders to determine how risky it is to lend you money. If your score is on the lower end of the scale, you may not be eligible for a loan, or you might not be able to borrow as much as you had hoped.
How can I access my credit report?
There are a number of online providers that can give you access to your credit report free of charge. These include: Equifax and Experian, for example.
What if there is a mistake on my credit report?
It is important that your credit report is an accurate representation of your credit history. If you identify any discrepancies on your credit report, you should contact the relevant credit provider or credit reporting body to investigate and amend your report.