This is calculated by looking at the ratio of credit card balances to credit card limits, and the ratio of loan balances to the original loan amounts. Credit utilisation: Another major factor in creating your credit score, accounting for up to 30% of the final number, is your credit utilisation ratio.According to Experian, this is the most heavily-weighted factor, accounting for as much as 35% of your score. Payment history: How faithful are you with your repayments, whether they’re on a loan or for a credit card? Lenders want to be confident that they can trust you to repay your debts on time, so even one missed repayment will have a negative effect on your score.So, what do Experian look at when calculating your credit score? According to the agency itself, the score is based on the following five factors: Your relationship with the lender and other pieces of the puzzle will also be considered. While your score will play a key role in whether a loan or credit card application is approved, it’s important to note that isn’t the only factor at play. An Experian credit score is given on a scale of 0 to 1000 – zero being the worst possible score and 1000 being the best. That’s quite a lot for one single number.īased in Ireland, Experian is one of the largest credit reporting agencies in the world, collecting and analysing the financial information of over one billion people worldwide. So, whether repayments will be made or missed, whether a loan will go into default, or whether something more serious like bankruptcy will occur. After an individual’s financial history has been analysed, a number is assigned that ‘predicts’ the likely outcome of a loan or credit card over the next 12 months. Experian credit scores 101Ĭredit scores are designed to represent the financial responsibility of an individual and the risk they represent to a lender – in a number. What do you need to know about your Experian score, and how do you get it working for you rather than against you? Let’s take a look. That is, the number generated by one of Australia’s three major credit reporting agencies (the others being Equifax and illion). So today we’ll be looking at everything you need to know about your Experian score. Understanding your credit score can consequently give you the power to improve it and your overall financial position.īut in spite of its importance, most people don’t really understand their score – what it is, why it matters, and how it came to be. While it’s not the only factor that a lender will take into consideration when determining whether a loan or credit card application is accepted, it’s often the defining one. To do this they employ credit reporting agencies, who offer up a simple number of three or four digits called a credit score.Ī credit score is basically a borrower’s risk to a lender, represented in a number. They need to know how likely a borrower is to pay that money back. Lending money or offering credit is a game of risk for banks and financial institutions. So, chances are there will come a time when you find yourself needing to borrow money. Things like a home, a car, and an education just don’t come cheap. The fact is, unless you’re the heir to a healthy trust fund or the winner of a million-dollar lottery, there are certain things in life that you simply can’t afford to pay for upfront.
Let’s dive into how your Experian score works. In Australia, there are three different credit scores from Experian, Equifax, and illion.
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