Credit crunch: Two thirds of Aussies still don’t know their credit score

28 June 2018, Sydney, Australia – Aussies are getting better at monitoring their credit score but they still have a long way to go according to new research by finder.com.au, the site that compares virtually everything.

The finder.com.au survey of 2,003 Australians found the number of Aussies who do not know their credit score – a number from a credit bureau that sums up your credit position so lenders can decipher what risk borrowers pose – has dropped in the past 18 months from 80% to 61%.

Money Expert for finder.com.au, Bessie Hassan says although this trend is promising, it means almost two thirds of Aussie adults still don’t know their credit score – a number which could significantly impact their financial future.

"It’s alarming that there are currently more than 11 million Aussies who do not know their credit score, including 13% who don’t know it because they do know how or where to find it which shows there is a knowledge gap”

“Worse yet, some Aussies are being penalised for unknowingly having a poor credit score,” she says.

Ms Hassan says it’s vital to know your credit score because being clueless could cost you.

“Borrowers have a vested interest in improving their credit score as lower risk can equal lower interest rates from lenders, which could shrink the interest you pay on your repayments,” she says.

“finder.com.au recently compared the price of personal loans from 20 lenders and found the cheapest loans for borrowers with stellar credit came with an average interest rate of around 9.8%. However, those with a riskier credit profile paid as much as 19.6% interest.”

“On a personal loan of $30,000 over five years, this could mean a difference in repayments of just under $10,000 ($9,221) in total or the equivalent of $154 more per month,” she said.

Preferential pricing for personal loans could become more prevalent with the introduction of Comprehensive Credit Reporting (CCR) from 1 July 2018 meaning knowing your credit score will be more important than ever from next month.

Ms Hassan encourages Aussies to not wait a minute longer and to check their credit score online.

“finder.com.au has offered free credit score checks since September 2017 and has recently upgraded its credit score checking service to give all Aussies a better understanding of how leaders perceive you.

“With a few simple clicks you can now access a comprehensive credit report with detailed information including repayment history, defaults or infringements and credit applications when you check your credit score.

“In addition, you can now check your credit score every month where previously you could only check it twice a year.”

“Furthermore, if you who’ve used the comparison site to check your credit score you will receive automatic alerts when there’s suspicious banking activity which may impact your credit score – one of the best parts, it’s free of charge.”

Tips for improving your credit score:

1. Redirect your bills when moving – To prevent your bills from being listed as defaults when you change your address, ensure that you provide your new address to banks, utility companies, phone companies and other lenders so that your bills are redirected to the new address.
2. Pay bills on time – Missed or late payments on some credit contracts (for example, home loans, personal loans and credit cards) can affect your credit score negatively, so ensure that you make the minimum payments on all your accounts on time.
3. Consolidate debt – Consolidating several loans into one can make it easier to manage repayments. It also helps you to save on fees.
4. Check your credit report regularly – This will help you monitor your credit applications so that you flag any applications or enquiries made as a result of identity theft.
5. Do your credit homework – To avoid getting into unnecessary debt, only apply for credit when you need it, and remember to arrange for a repayment plan that suits you to avoid missing repayments. It also helps your credit score if you space out your credit inquiries.