No matter how hard you’ve saved a bad credit score can kill your dreams. Our article runs through the credit scoring system and tips on how to keep your credit score healthy.

Personal Credit Score

Often overlooked, however, a low credit score can result in your loan application being rejected regardless of how hard you’ve been saving.

What is a credit score?

Put simply, a credit score is a number based on the analysis of your credit file. Credit providers and even utility and telephony companies use this to help determine if you’re suitable for a particular product. Depending on your score the service provider may reject or modify your application.

Your credit score may differ slightly depending on the reporting agency used, but your credit score falls within the following range/classification:

  1. Excellent – you’re highly unlikely to have any adverse events in the next 12 months.
  2. Very Good – You’re unlikely to have an adverse events within the next 12 months.
  3. Good – You’re less likely to experience an adverse event within the next 12 months.
  4. Average – You are likely to experience an adverse event within the next 12 months.
  5. Below Average – You are more than likely to have an adverse event within the next 12 months.

Events are defined as credit risks that could arise within 12 months. i.e. late bills, loan default, debt agreements.

The categories are number ranges which fall between zero to 1,200 or zero to 1,000 (depending on the agency used).

How do they calculate my credit score?

You credit score is based on a number of financial and personal information that has been collated about you, which in return creates your credit score. The information used to determine your score includes:

  • Your Details (Age, Address)
  • Type of credit provides you have used (e.g. utility or bank)
  • The number of credit applications and enquiries that you have made
  • If you’ve got debt agreements or personal insolvency relating to bankruptcy
  • The amount of credit that you have borrowed
  • Your repayment history and whether you make payments by their due date
  • Usual repayment amounts
  • The number of products you’ve held in the last 2 years

In essence, if you’ve applied for credit, a utility service or a loan there will be a report about you.

How do I find out my credit score?

You have the right to legally obtain your credit score and there are a number of service providers who can provide you with your credit score free of charge. The main provides are Dun and Bradstreet & Equifax. Their credit report services are:


Also, it’s worth noting that these companies provide a premium service which will notify you of any alerts or changes to your credit score. With identity theft on the rise, it’s worth having an altering system that notifies you when someone performs a credit check on your profile.

What happens if I’ve got a low credit score?

There are a number of 3rd party credit repair agencies who will work on your behalf to repair your credit score, or you’ve got the ability to do it yourself. Often a low credit score can be the result of something trivial such as outstanding council fees or an outstanding telephony bill that you’ve simply missed. The best approach is to order a detailed credit report to identify what’s impacted your score. You can then set about rectifying the credit event.

How to keep a healthy credit score?

  1. Regularly review your credit score: Make sure you review your credit score regularly to make sure that it’s accurate. Things like updating your address or identify fraud (credit taken out without your knowledge) can impact your score.
  2. Pay your bills on time: Simple I know, but this is a key component in assessing your credit worthiness. Look at using direct debit if you struggle to stay on top of payment dates or set up calendar alerts.
  3. Don’t keep on applying for credit: Every time you apply for credit, your credit rating can slightly drop. We’ve founds issues in the past where clients who switch credit cards on a regular basis (to gain signup reward points) had their scores dramatically reduced, resulting in an application being rejected.
  4. Keep your credit card balance low: This is favourable to your credit score. Also, lenders are asking for credit card statements, so the lower debt the better.

The big no no’s. Things that will damage your credit rating

  1. Having bills that are overdue by 60 days or more.
  2. A number of credit applications in a short period of time.
  3. Making no efforts to reduce any debt.
  4. Credit Card Balance transfers – if you’re rejected, or you can’t meet minimum repayments, or if you apply for multiple transfers.
  5. Refinancing your home loan – do the research first! Make sure you don’t get rejected on your loan refinance.

In the end, your credit score comes down to how disciplined and what your credit behaviour is like. The smarter you are with money and debt the better your credit score will be. Talk to a Dreamstreet Broker (link to the request a call back page) about how we can find a loan that is suitable for you.

The Dreamstreet Team