KNOW YOUR CREDIT SCORE

Find out how you rate 9 ways to stay on top of it Recover from a black mark

- PAUL CLITHEROE

NICOLA FIELD

Picture this: you earn a decent income, you've saved hard, and now you're ready to apply for a home loan. But the lender knocks you back. The reason? You have a poor credit score

Whenever you apply for credit - be it a home loan, credit card, a new mobile phone account or even a new energy plan, the provider will likely check your credit score. It's a number - either out of 1000 or 1200 - which offers an at-a-glance indication of how well you've handled debt and credit in the past.

Clearly, there's a lot riding on your score, so it pays to keep it in great shape. Yet Credit Simple, a credit reporting agency, found a whopping 65% of Australians don't know their credit score. Even more are in the dark about what it means.

Your credit score is based on your personal credit record. That's a dossier showing the different credit products you have, how many loan applications you've made, how well you've kept up repayments -whether you've run late or skipped them altogether. Your credit record also shows serious nasties like court judgements (for something like non-payment of rent) and personal bankruptcy.

“Typically, lenders will check both a borrower's credit score and credit record when they apply for any loan,” says Simon Beitz, CEO of Alex Bank, a digital service. “A customer's credit score helps the lender determine the interest rate they offer, and their credit record will give the lender further insight into an individual's credit and repayment history. These checks aid the lender's overall assessment and final decision outcome.”