Your credit score is a number that is calculated using the information contained in your credit file.
In Australia, your credit score will fall in a range. For example, with Veda Advantage the range is between 0 – 1200.
The higher your credit score, the better your chances are of getting a loan or service.
Because your credit file is always changing, for example you may take out a new loan or had something expire that was listed, your credit score is also regularly updated.
You also can have more than one credit score, because each credit reporting agency calculates their own credit score, based on the information they hold on you.
What is the difference between your credit file and your credit score?
Your credit file is the most important document about your financial status. A credit file is the document that the bank sees to work out whether you should be approved for finance. The reason banks and other credit providers look at a credit file is because it contains all the information they need to see to make a decision. It will tell you whether you have overdue accounts and judgments that will ensure you won’t get a low interest loan. It will tell you how many credit applications you have made which will impact whether you can be approved for finance. It will also let you know if you have cross linked credit files which can also stop you getting a loan. Finally, it will also tell you about all your commercial credit enquiries, contracts, and overdue accounts and judgments.
On the other hand, a credit score is a numerical indicator of the status of your credit file. It is quite useless to understand why you are being knocked back for finance because a score doesn’t give you that information. In order to understand what is really going on you need to obtain your comprehensive credit file, and then seek a specialist assessment of it, to improve your chances of being approved for finance.