Aussies in affluent suburbs have lower credit scores, study shows

Wednesday 22 February 2017

Article by Kelly Emmerton

Living in an affluent suburb is not necessarily an indicator of financial savvy and in fact rural Aussies come out on top as far as good credit goes, according to new data from getcreditscore.com.au.

Aussies in affluent suburbs have lower credit scores, study shows

Data from the fourth annual Veda Australian Credit Scorecard, taking into account 2 million VedaScores from across the country, showed a correlation between property prices and credit scores.

In rural areas, where housing prices are lower, credit scores tended to be higher. Inner city residents, on the other hand, had lower credit scores and are facing much higher median property prices.

In NSW, for example, Darlinghurst, which has a median house price of $1.78 million, is home to residents with a low average credit score of 738. McGraths Hill in the outer suburbs of NSW, on the other hand, has a median property price of just $682,000, but an average credit score of 787.

Victoria shows much the same trend - in Lilydale, where the median house price hovers around $624,000, the average credit score is 789, while South Yarra in Melbourne City has a much higher median house price of $1.46 million and a lower average credit score of 739.

RELATED: What does your credit score say about you?

Luke Keller, CEO of getcreditcsore.com.au said that the research “showed that with some of Australia’s wealthiest suburbs on the lower end of the ratings, this wealth may not be all that it seems.”

The data certainly seems to suggest that households spending more on property and managing larger mortgages are not as financially stable as those borrowing smaller amounts.

And it’s no wonder, when Mozo’s home loan calculator shows that on a home loan with a low rate of 3.59%, there could be a more than $520,000 difference between a 30 year mortgage to buy a property in Lilydale, as opposed to one in South Yarra.

Credit scores were also split along gender lines and generations, with women having generally higher scores than men, though interestingly, while men’s credit scores increased with age, women’s tended to decrease.

Credit scores by gender and generation

GenerationFemaleMale
Gen Y (18-34)30422
Gen X  (35-44)28937
Baby Boomers (45-64)25175
Builders (65+)156170

“There is real value having a strong credit score as it can affect you and your future financial options. With many Australians confused as to what affects their credit scores, greater self-education is needed on individual credit histories so Australians can begin to improve their credit rating,” Keller said.

One of his tips for improving your credit score was to keep track of credit commitments. In order to do so effectively, it’s a good idea to regularly review your credit cards and home loan to check you’re getting the best deal on the market at the moment.

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