Ever since the introduction of Comprehensive Credit Reporting (CCR), it’s safe to say that Aussies are talking about their credit scores a lot more than they used to.
But according to new research from peer-to-peer lender, MoneyPlace, less than 0.5% of Aussies are likely to have a perfect credit score.
However, with more and more banks adopting the new system it’s predicted that 90% of Aussies will see an improvement to their credit score.
And according to the data, it appears that even the most creditworthy borrowers still have some debt to take care of as almost half of the lender’s top borrowers are looking to consolidate debt.
In fact, MoneyPlace revealed that a grade A borrower, with a score of 982, applied for a debt consolidation loan of $25,000.
This was followed by home renovation and car loans at 12.5% and 12%, respectively.
And with the first implementation of CCR back in July, many Aussies are now prepared to put in the work to earn a better score in exchange for better rates.
“While we aren’t at the point of the US where a good credit score will help you get a better date, a high credit score means you will increasingly be able to access cheaper interest rates and therefore save thousands of dollars,” said CEO of MoneyPlace, Stuart Stoyan.
In August, Mozo reported on fellow peer-to-peer lender RateSetter who, in 2018, recorded the highest number of debt consolidation loan applications since the business started in 2014.
“With the rollout of CCR, I’m not surprised to see that more Aussies are taking out debt consolidation loans to help their credit score,” said Mozo Product Data Manager, Peter Marshall.
“But it is important to remember that while these types of loans can help you pay off your debt, if you’re not careful, you could end up with even more debt.”
“That’s why it’s so important to make sure that the interest rate and fees on the loan is significantly lower than those of your current debts.”
The making of a top borrower
Aside from demolishing lingering debt, MoneyPlace’s data also revealed another consistent behaviour across all ‘top’ borrowers was their ability to always pay bills on time.
These borrowers also paid more than the minimum on their credit card bills and were more likely to own their own home.
Only increasing their credit limit when necessary and using credit within their means was another behaviour that could help a borrower’s credit score.
So if you’d like to take control of your debts before CCR comes into full effect, you can head over to our personal loan comparison tool to compare a range of debt consolidation loans.