What Affects My Credit Score?

By Angela Monroe - August 6, 2018

Have you recently found out that you have a bad credit score? Many people don’t actually know about their bad credit score until it’s too late and they’re in a position when they want to borrow money.

Find out as much as you can about your current credit score to be in the strongest position to help yourself. We’re here to help you get a loan even if you have a bad credit score.

What affects my credit score?

A credit score is used by lenders to help decide whether you qualify for a requested loan. It is based on your credit report – a detailed record of your past credit history.

If your credit score is low, you are usually seen as high risk to a lender – whereas if you have a high credit score you are seen as a low risk.

There may be many different reasons why you have a bad credit score and don’t panic – there are things you can do to improve and raise your score.

To really improve your credit score, you need to be aware of the factors affecting it. These can include:

Payment History

Lenders want to know your past history with credit to figure out where they may stand if they choose to lend you money. If you have had late or missed payments on credit accounts in the past, this could very likely be affecting your credit score.

Help your credit score:

It’s really important that you get organised with any payments you need to make. Set reminders to always pay them on time and ensure that you are budgeting appropriately to make payments in full when required.

Amounts Owed

If you have a number of credit accounts and owe money on these, this will affect your credit score. Paying off owed credit can help to increase your credit score by showing that you are living within your means and are able to pay back what you owe in a timely manner.

Help your credit score:

Always remember to close down any accounts that you do not use any more. If there are accounts with only a small amount owing, try to pay these off and close them down to streamline things for yourself and to help your bad credit score.

Length of Credit History

This is an interesting one. Many people find that they have a bad credit score simply because they have not used credit before. If you are applying for credit for the first time and lenders can find no record of you borrowing in the past, you may be considered higher risk.

Help your credit score:

Luckily, if the rest of your credit report is relatively good, you may still be able to get credit despite not having a long credit history.

Credit applications

It’s become incredibly easy to apply for credit nowadays. However, if you’re wondering what affects my credit score, you might want to think about how many applications you’ve made for credit in the past few months.

Lenders can see all of your credit applications and multiple applications will always raise red flags to them.

Help your credit score:

Only apply for credit after thoughtful consideration and limit the amount of applications you make. It’s always best to speak to an expert to get a really good idea of the type of application you should be making and to find out what are the best options for you if you do have bad credit.

Keeping things stable

The other useful thing to consider when you’re wondering what affects your credit score is the stability you can prove to a lender.

A lender ultimately wants to know how reliable you are. Even if you have a bad credit score, there are ways to show that you are able to pay back loans.

Alongside your credit score, some useful documents to show to lenders can include:

  • Proof of regular income – through pay slips or bank balances
  • Proof of address – through a lease or contract, even if you are subletting
  • Proof of residency – this can be through a passport, driving licence or ID.

Speak to us today to find out how what factors may be affecting your credit score – we want to help people with bad credit to get the best options for them. We can help you show the strength of your situation to lenders so you can get approved for a loan despite your bad credit score.

Angela Monroe
Angela Monroe is the Community Manager at The Positive Group, specialising in giving people the information that they need when they need it, and putting you on the path to a fair financial future. She has 8 years of experience in helping Australians find the right finance solutions, and regularly contributes articles to empower Australians with the knowledge they need to become financially healthy.


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