We often find there is a great deal of confusion when it comes to your credit score and what variables do impact it and what don’t. This week we thought we’d dispel some commonly held beliefs and outline what factors don’t impact your credit score.
- Your Income
While your salary and income will impact your overall borrowing capacity with lenders, it won’t show on your credit report. This is quite understandable, particularly as your income could fluctuate over time, can be derived from multiple sources and could face interruptions over time. Your income also won’t highlight anything about your debts or how well your manage your household finances.
- Your Current or Previous Assets
What assets you own, whether directly, jointly or through holding entities such as a discretionary family trust also won’t show up in your credit report. Given that your credit report is all about your credit history, it makes perfect sense that your current assets wouldn’t be included. Again, your lender will be interested in exploring your current assets when applying for financing, particularly if you’re utilising equity or other assets to cover the deposit.
- Outdated Information
There are often misconceptions about how long data will remain in your credit report. Any missed or late payments to certain providers will remain on your credit report for a period of two years, while any repayment defaults will remain on your report for five years. This can be particularly damaging in reducing your chances for a loan, particularly the defaults, so it’s important to monitor your household finances and ensure that you’re not in this position. This is particularly important for Australian expats who will often find themselves forgetting about certain repayments or bills when leaving Australia.
- Your Relationship Status
Whether you’re single, married or in a defacto partnership, this also won’t show up in your credit report. This is quite understandable, as again it won’t tell anything about your liabilities or ability to manage your money.
- Credit Score Enquiries
Checking your credit score yourself also doesn’t impact your credit score. The only time that this will display and could impact your credit score is when actual lenders conduct the check for you when you’re applying for credit.
It’s important to ensure that you remain on top of your financial commitments to ensure that your credit score remains position and gives you a sound opportunity to obtain financing if you wish to.
LoanSuite Pty Ltd is your lending partner for all of your home loan, investment property, business and commercial financing needs. With our wide range of lending solutions, expertise in financial planning and investment strategies, and extensive experience in working with both Australian residents and Australian expats, we are your partners for your lending needs.
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LoanSuite Pty Ltd is an Authorised Credit Representative (Credit Representative Number – 494608) of My Local Broker (Australian Credit License – 481374). Important Disclaimer: Your complete financial situation will need to be assessed before acceptance of any proposal or product.