Do you understand how credit scores work? 77% of Aussies don’t
We’ve all probably experienced that guilty feeling of missing a utility payment or racking up a bit of debt on our credit cards but when it comes to understanding what a credit score is and how it is used by a lender to grant credit, a high 77% of Aussies are in the dark.
Experian research said Australians are more reliant on credit than ever before, however we are too busy “getting by” to worry about our credit worthiness.
Director at Experian Andy Sheehan explained as a nation we are “alarmingly misinformed when it comes to our credit reports...whereas in overseas markets, consumers are more empowered to take charge of their credit profile, actively manage their credit reputation and use it to get a better deal.”
The study found several areas where Aussies are misinformed, as 65% of Aussies incorrectly believe contributing to superannuation or saving money can have a positive impact on your credit score and 19% of Australians incorrectly believe that having multiple lines of credit open can positively impact your creditworthiness.
Currently the negative credit reporting system doesn’t take into account, good credit behaviour. Sheehan suggested “Australians deserve to be recognised for good financial behaviour and this should be reflected in our credit report to enable better deals”.
Sheehan said a step in the right direction would be for Australians to become better informed and more proactive with their credit reputation.
“How we manage debt has a major impact on our life. While saving is important, it’s also important to make paying down debt one of your priorities,” said Sheehan.