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What to do if your Equifax score is low?

Your credit score is one of the key foundations of your loan eligibility. Get to know more about it in this article.

Formerly known as Veda Advantage, Equifax is the largest credit rating agency in Australia. It provides personal and business credit reports throughout the whole country. Other credit rating agencies in the country are Illion and Experian.

When you apply for a home loan, the bank will request your credit report and will base their assessment on it. Whether you are a strong borrower or not depends on your Equifax Score. 

What is a good Equifax Score?

Equifax Score ranges from 200 to 1,200. The average score is 550. While the number goes up to 1200, it’s pretty rare to see scores higher than 900. The same goes for scores lower than 200 which is already a pretty bad score. 

Of course, it follows that the lower your Equifax Score, the more the bank sees you as a credit risk. 

When you apply for a loan, the bank itself will request your credit file from Equifax. You may see your score but you will not get a copy. 

Request a copy of your Equifax Score from them after paying a subscription fee. That is if you want a copy for yourself. You may check their product prices here. The most affordable plan is worth $4.95 per month. In this plan, you are entitled to one credit report every year. Aside from this, you can also get credit alerts along with other identity protection features. 

How is your credit score computed? 

Your credit file contains all your basic information such as your name, current address, all previous addresses, and date of birth. It also has your employment details and driver’s license number.

When you apply for a loan with any type of lender, that automatically gets noted in your credit file. Now, different loaning institutions have different scores. If there is a record of you borrowing from a risky lender, that gets a low score compared to when you apply for a loan with a safe lender. 

The same risk scoring is applied to the types of loans that you get. Home loans are considered safe than car financing. 

And then there are the credit enquiries. These are a record left on your credit file whenever you apply for a loan. All types including your mobile phone plan and credit cards are here. 

Too many credit enquiries on your file is a red flag. A lender may wonder why you have so many denied applications. One to two enquiries in a period of 6 months are okay.

When you are more than 60 days overdue on a loan, that is listed as a default. This will significantly lower your score. Bankruptcy and court orders are also factored in on your file. 

Credit report

How do banks decide if they will lend you money or not?

Not all banks use a borrower’s Equifax Score to determine eligibility for a loan. Some just look at the financial documents you submitted. 

There are online credit score calculators that can help you assess your situation. Equifax has a plan where you can see the Top 4 Credit Score Key Contributing Factors. Or, you can also call your trusted broker to help you assess your situation. There are loan programs for people with low credit scores or those who have too many credit enquiries on their file. 

Can you improve your credit score? 

Now that you know what factors affect your credit score, you can work towards positively making an impact on these factors. Avoid applying for credit cards that you don’t need. Or from credit card providers considered risky. Pay all your dues and bills on time.

 If you believe wrong data is dragging your score down, you can ask Equifax to take a look and fix it. You just need to submit a request online or via post. Include your basic information and the details of the data dispute you are requesting. Equifax provides this service for free. 

If you have a low credit score, it’s not the end. Can you still get a home loan if that’s the case. Our brokers have an extensive knowledge of special loan products that will fit your situation. Just give us a call and we’ll help you secure the home of your dreams.