What You Need to Know about Veda’s New Credit Rating System If you’re in Australia and have a mortgage, a phone contract, have ever applied for a loan or have a credit card, chances are that leading credit bureau Veda already has a credit file for you.
This file includes a credit score, which is updated regularly. And due to recent changes, Veda is now making it possible for everyday Australians to apply to access their credit scores - whereas before, only credit providers were able to do so.
Why is this important? According to a recent survey of credit active Australians, 93% know they have a credit record but didn’t know they can access it, 81% are not really worried about their personal credit history, and 80% have never tried to check their personal credit history.
The trouble with that is as follows: it pays to know your credit rating before applying for finance because multiple applications can negatively impact your credit score. In other words, if you have a below-average score and are therefore declined a loan by one bank, this loan refusal will be recorded on your credit report and may negatively affect your chances of being approved by the second lender you approach.
What information is used to calculate the credit score? Your score is comprised of the following: - Your personal ID and information (your name, address etc.) - Consumer and commercial credit information - Information available on public record.
Can my credit score be improved? If so, how? There are a number of things you can do in order to maintain a good credit score or improve it. Veda makes the following suggestions: - Check your credit score often - Pay your bills on time (including paying off your credit card) - Check your score before applying for finance - Minimise the number of applications for credit that you make - Keep all your credit providers up-to-date on your address when you move house - Protect yourself from identity theft (make sure you change passwords frequently, keep your bank cards and information safe and so on).
Also, did you know that a new car loan can help fix your credit score? We talked about it briefly and you can read about it here.
What will my VedaScore look like? Your score will be a number between 0 and 1200, with a higher number meaning a better score. This is then measured against the national average, placing you in a percentile, with your ‘credit risk’ being rated anywhere from ‘below average’ to ‘excellent’ compared to other Australians.
Does a bad score mean I can no longer obtain finance? Not necessarily. Whilst it is true that the higher your credit rating, the greater the likelihood of you being approved for a loan, it’s important to note that your VedaScore is not the only factor credit providers take into account when considering a finance application. Your chances of approval will also depend on the type of loan/finance you are applying for and, often, the type of lending institution you are applying to, as many providers (banks, phone or electricity companies or credit institutions etc.) have different approval criteria. That’s why we highly recommend applying for credit with a company who draws from a large database of loan providers, as this gives you maximum chance of approval with just one application.