Credit scores

Let’s take a moment to talk about credit scores. What are they, what purpose to they have, how to influence your credit score and what benefits to having a good credit score have?

Firstly let’s tackle what is a credit score! A credit score is also known as a credit rating, or credit history. It is literally a score between 0 - 1200 that determines the ‘creditworthiness’ of an individual.

A credit score is influenced by the way that you conduct your ‘credit’ facilities. Anything that requires you ‘taking out credit’ will have an impact on your credit score. For example utility bills, rental agreements, loans and credit cards all have an impact on your credit score. If you pay all your bills and loans on time or early your credit score should be great, however if you haven’t paid your bills or loans on time in the past, then chances are your credit score that be impacted.

The easiest way to ensure your credit score remains strong, is to ensure you pay everything on time. It’s that simple! If you are unable to meet your commitments on time, then the best thing to do is contact the credit provider and seek to implement a payment plan, this will assist with maintaining your credit score is in tack.

The benefits of a strong credit score are beneficial to each individual, for example some lenders will only deal with people who have strong credit scores. This puts the individual in a greater position to bargain on interest rates and fees. Alternatively having a low credit score may mean that you are subjected to paying a higher interest rate or fees.

Anyone that is 18 years of age or older can check their credit score for free via one of the credit score websites such as canstar or clearscore.