What Is Bad Credit?

What Is Bad Credit?

To get a loan on time, you must have a good credit file. A good credit file means you have high credit scores. In Australia, there are many credit reporting agencies. These agencies collect data and they give you a credit score.

Usually, credit scores are counted on the basis of 1000 points (Experian). Now, if you have a credit score below 580, then it’s called a bad credit score. With a bad credit score, it could be difficult for you to get a loan.

How Bad Credit Scores Are Calculated?

Popular credit reporting agencies follow their own models to calculate bad credit scores.

For example – Experian and Equifax are the two reliable credit reporting agencies in Australia. They have different models to calculate your credit scores.

However, the basic rules are almost the same. These agencies will take a look at your payment history and credit history. You may have been using different credit products or you may have many credit accounts. These agencies notice everything and then they give you a credit score.

How To Deal With A Bad Credit In Australia

1) Paying Your Bills On Time

You should pay your loan repayments to the bank on time. Apart from that you should also pay your bills on time. When you pay following a strict schedule, your credit score improves.

2) Clear Your Debts

You may have taken loans from multiple sources. Talk to your creditors and try to clear all your debts. You should always try to keep your debt under your control. Thus, you can have good credit scores.

3) Know – Why You Have A Bad Credit Score

There are multiple factors that can lead you to get a bad credit score. That’s why read your bad credit report and try to assess – why did you get a bad credit score? Then, it would be easier for you to improve your credit score.

To improve your credit score, you should keep your credit file transparent. Lenders should know that you have no credit-risk associated with you. Thus, you can get a loan on time and without any headaches.