Low Credit Score but Zero Debts

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  paul11 on 09/01/2016 - 21:53

  When did you arrived ? Once you are here for atleast 2 years with a stable income history, most banks will happily lend you. Source: personal experience.

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  fantafox on 09/01/2016 - 21:55

  I was dating a girl who's ex boyfriend worked for GE finance. I didnt have any bad debt , late payments defaults, nothing. But I kept getting knocked back on interest free deals at Amart. All they would say is that my credit rating failed. Found out this % $€¥ stick had messed with my rating. The fact that you are migrants would have an impact. Same with income. Cant see the fact that you have moved house as a factor. Start by cancelling CCs. Consolidate any debt.

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  DarkOz on 09/01/2016 - 22:26

  Your income is a major factor as well as a stable residency and employment. What you can do is check your credit score by manipulating some or the inputs as long as you are not applying for an actual loan.

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    sunnyskyu on 09/01/2016 - 23:20

    I am on a relatively high income from a permanent based employment.
    I have paid around $100k+ in credit cards for last 5 year and never late on payments for last 7~8 years.
    Guess what… I have a lower credit score than 610.

    Then I recently figured out the reason why… none of the banks and credit cards company that I dealt with supplied the payment information to Veda, or Veda simply stuffed up my credit file…
    I contacted Veda numerous times and whenever I lodge a request to revise my credit file, Veda blamed the banks and asked me to contact them directly. So I contacted the banks then they blamed Veda.

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      gooddealmate on 10/01/2016 - 16:57

      Not all financial institutions use the same Credit Reference Agencies. Have a look at www.creditsavvy.com.au which uses data from Experian rather than Veda. My score happens to be higher with them. May come in handy when applying for credit to know which agency they use.

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      Saanch on 15/05/2016 - 17:24

      I am having a similar problem, My CC is with CommBank. Creditsavvy, Experian or veda doesn't have my CC details and payments. I have called both bank and credit rating agencies and both blames the other one. Is there anyway we can correct it?

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  DrStinge on 09/01/2016 - 23:10

  I would see whether this actually affects you or not - I've found credit scores to be secondary to actual income.

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  mskeggs on 09/01/2016 - 23:12

  +1

  Australia is in a bit of a transitional period as we (foolishly, I think) have moved to active credit reporting.
  So some scores will be a bit 'off'. But the flip side is most lenders use them only partially,as they were almost worthless a few years ago. So don't be discouraged if you are considering a mortgage etc. a good mortgage broker will help you find the right loan, and there are a few on OzB who usually pipe up with good advice.
  If you don't need credit immediately, just relax and keep doing what you are doing - a big deposit trumps most other issues!

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  CheapskateQueen on 10/01/2016 - 11:32

  +1

  You should both get your credit reports from here for free http://www.mycreditfile.com.au/ (This is an official legit site). Everyone can get a report for free once a year.

  It might not have that much information and offer no help, OR it might show you that you did default on something by accident or fraudulent credit applications or something which can explains the low credit scores. It's free and it doesn't take long to apply so do it.

  I don't think they're allowed to base your score on the fact you're an immigrant. That'd be racial discrimination. Maybe there is a difference between people with Citizenship and PR?

  I think that moving so often probably had a big impact on your score.

  The only thing you can do, is to keep doing what you do.Pay your bills on time and don't apply for credit you don't need. Our reporting system has changed recently so now institutions actually report when you pay your bills on time, rather than only when you default so i think we'll start seeing a better scoring system in the next few years.

  I don't think your score is going to stop you from getting a loan for a home. The banks will be more concerned with your savings, income, ongoing liabilities etc If you went to a bank with a decent deposit, capacity to repay the principal and interest, while also covering other expenses, no credit debt etc, you'll be fine. They'll do all their own checks on you.

  FYI, I, and a lot of us on OB, and I'm sure a lot of bankers, think the credit score is a poor representation of credit worthiness because what it's based on is so limited. My credit score dropped significantly because of frequent credit card applications last year. Sure, if the only information you have is "this person applied for 4 credit cards in 18 months" it might look like I was in need of credit. But what the report doesn't include, is that I had $0 owing on all cards, paid the Closing Balance in full each month on time, never missed a payment in 10 years and strategically used all those cards to make money and save money via bonus frequent flyer points and leaving my money in offset accounts to save on mortgage interest. So I actually put myself in a better financial position than someone who did not apply for those credit cards. Plus I had the added onus of of successfully juggling like 7 credit cards and $50,000 in credit limit. That should all rank me higher not lower. So don't despair about your score too much!

  It'll take a while to "repair" or "improve" your score. I've been monitoring mine and it took 6 months to go from 595 to 636

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  MrBigglesworth on 10/01/2016 - 12:31

  Hi myfuturej,

  A lot of valid points in the replies so far. As a mortgage broker, what I have to add is;

  1) The credit score is an indication of available information. The lowish score, assuming a clean credit file, just means that you didn't apply for as many services that require a credit enquiry, therefore they don't know how reliable you are in NOT defaulting. Quick scenario, a client of mine has a score in the 900s, but he is a presently the director of a company placed under voluntary admin. Nobody save the non-conforming (read;sub-prime) lenders will touch him until the company gets de-registered.

  2) The length of time of files also play a role. I can only assume that you've been here for at least 4.5 years, which is a reasonable length of time, just maybe not long enough to boost your score up.

  3) There are lenders who don't credit score. AMP and Macquarie come to mind.

  In summary, the credit score is not the be-all and end-all of acquiring a loan. If you have any questions feel free to PM me and I'll answer them as best as I can.

  Cheers.

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  myfuturej on 29/01/2017 - 23:38

  +1

  Thanks everyone. We just got full approval for our home loan! I thought our salaries were really crap and with a low credit score,we assumed that getting a mortgage is beyond us. We chose to buy in a relatively cheap area, almost rural VIC, but it's 15 minutes away from my partners workplace, so it was quite convenient for us.

  The process was quick and we even got very competitive rates.

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    mbck on 30/01/2017 - 21:23

    Congrats! Happy for you and your fam. Good luck!