With recent changes to Veda’s credit scoring methods, it is time to ensure your financial behaviour isn’t jeopardising your credit score. Unless you have recently been seeking finance, you may not even be aware of your score.  People can be shocked the first time they have a look.

What are the implications of the scoring method changes?

Simply keeping your repayments up to date no longer guarantees your Credit Score is safe. Veda scores now rely on significantly more data from a far larger range of sources than ever before.

The scoring system is based on data held on a rolling 2-year basis. With some information specifically related to credit contracts retained on record for 5 years.  Many people are often shocked to find it is not just debt contracts that can impact on your credit score.  Many types of contracts and activities can effect your score.   For more details on what is in a credit report read Veda’s comprehensive guide..

The areas that can negatively impact your credit score but are often overlooked are:

  • Defaults and/or late payments on your bills/contracts over the past 2 years;
  • Applications for credit within that 2-year period;
  • Multiple applications for credit in a short period of time;
  • Consistent repayment history (positive reporting)

What should you do to keep your credit score in tact?

Firstly, be aware of what your credit score is now.  Everyone is able to obtain a free credit report once a year, directly from Veda. Credit scores sit between zero to 1200, and the national average is 757.  An “excellent” VedaScore is between 833 to 1200, “very good” is between 726 to 832, “good” is between 622 to 725, “average” is between 510 to 621 and “below average” is 509 or less.

Secondly, be careful when you “shop around” for credit, this is as simple as seeking the best rated loan or mobile phone plan.  It is worth doing your research before making formal inquiries.

Most importantly, don’t miss a payment on your credit cards, bank loans, electricity bills, telephone bills, rates, or any other bills or invoices and you will be OK.  Sounds easy, but for most people it is not. We are all busy people and sometimes we simply overlook bills and miss paying them on, or before, their due date. In this new era of reporting, this could seriously impact your credit rating.   Setting up direct debits is a good start but not a guarantee if the money is not available in your bank account at the right time.  You need to start further back than that with a personal cash flow plan for when your expenses/bills fall due and allocate your income to meet these.

Explore your options to outsource the work

Our lives today are a constant juggle, with work, ambitions and relationships we all feel the squeeze of time and demands.  With a service like Bill Butler, you can have your bill and debt payments managed for you, ensuring that your payments were all met on time, every time. With sophisticated cashflow reporting tools Bill Butler can highlight future issues so they can be planned for.

Having an objective money coach review your incomings and outgoings helps you to make those small adjustments that have big impacts over time, ensuring you are setting yourself up for success.  Managing your credit score is important but setting a course to achieving your financial goals, starting with the little things, is the ultimate aim.

Whether you‘ve already seen your Credit Score negatively impacted and need to structure your finances to improve it, or you want to make sure it never is impacted, outsourcing the management of your personal finances makes good financial sense.

Stephen

Stephen has over 20 years experience working as a strategic Financial Planner. He is passionate about assisting Financial Advisors and Businesses get proactive and make a difference to their client or employee success. LinkedIn Profile