There comes a time in every woman’s life where she stops looking forward to spending her money on smashed avocado on toast weekends and starts looking towards bigger and better dreams. Whether yours is to move overseas, start your own business or buy your own home, all of our dreams have one big thing in common: we’re most likely going to have to access credit to make them happen.
Before you start looking at flights to NYC or running off to IKEA to deck out your someday-soon apartment, there’s one important factor you need to wrap your head around: your credit score.
To learn more about what exactly constitutes a credit history and how that can have an impact on my future, I spoke to Belinda Diprose, a representative of Veda, the largest credit reference agency in Australia and New Zealand and part of Equifax Inc. Belinda has been in the financial services industry for over 12 years and spent the past five helping consumers understand the importance of their credit report and credit score in taking control of their financial health.
Here’s what she had to say.
"All of our dreams have one big thing in common: we’re most likely going to have to access credit to make them happen." Image: iStock.
What is the difference between credit rating and a credit score? What are they used for?
Your credit rating and your credit score are essentially the same thing. Your credit score is a number between 0-1200 – 1200 being the highest possible score – which summarises your credit history and rates your “credit worthiness” – that is, to let lenders know how likely you are to make good on your repayment agreement.
Who can access your credit score?
Only you, Veda and those you have given permission to can access your credit score. Whenever you apply for credit, you agree to allow the lender to access your credit information including your credit report or score as part of the terms and conditions. This happens whenever you apply for a credit card or a loan, but also other forms of credit like mobile and internet plans, electricity and gas contracts and interest-free finance for furniture and appliances.
Veda conducts an annual “state of the nation” study that offers market-leading insights into the credit behaviours, attitudes and credit scores of Australians. The most recent study found that Australians on average enjoy healthy credit ratings, with the national average sitting at 757. This average is even higher when we look at women exclusively, sitting at 768.
23% of Aussies have also personally accessed their credit scores in the past year, suggesting that more people are taking control of their financial health.