Whether you are a young Australian looking to build your credit history, or have recently seen your credit score drop and are working to improve it, there are a number of reasons you can monitor your credit score.
But how often should you check your credit score, and is it bad to check multiple times in a year? And can lenders really hurt your credit score by checking your credit history too frequently?
Let’s see how often you might want to check your credit score and credit history.
Why check your credit score and credit history
First of all, it’s important to note that your credit history and credit score are two separate things, and how often experts recommend you check them will differ.
Your credit history helps determine your credit score. This is a report that tracks your financial responsibilities and any credit or debt repayments. This information comes from banks and lenders, credit card issuers, collection agencies, and utility and telecommunications providers.
There are many events that can be recorded in your credit history, including your repayment history, the money you borrow, credit applications, defaults, debt agreements, or bankruptcy.
Your credit rating is a number that helps indicate your creditworthiness and degree of reliability as a borrower, calculated based on your credit history. It is used by various organizations, such as loan and credit card issuers, to help assess the risks associated with whether to offer their products.
In Australia, there are two main credit reporting bureaus: Experian and Equifax. Experian and Equifax have their own credit scoring systems which are divided into five levels. As you can see, Experian and Equifax have two slightly different credit score scales. Equifax scores credit history between 0 and 1200 and Experian scores between 0 and 1000.
|Credit score levels||Experiential||Equifax|
|Excellent||800 – 1000||833 – 1200|
|Very good||700 – 799||726 – 832|
|Good||625 – 699||622 – 725|
|Fair||550 – 624||510 – 621|
|Bad / Below Average||0 – 549||0 – 509|
Source: Experian.com.au, Equifax.com.au.
This means that you will have more than one official credit score, but it should be at the same level of credit score in both reporting bureaus. If you want to get a copy of your credit report, you will need to contact one or both of these reporting bureaus.
Harsh credit inquiries and flexible credit inquiries
Before you start digging into your credit history and credit score, keep in mind that there are two ways to review an individual’s credit history, and one can hurt your chances of being. approved for future products
There are two types of credit checks: physical credit checks and flexible credit checks. The former usually arise from a bank or similar lender, for example if you are applying for a home loan, personal loan, or credit card. The latter should happen when your credit history is not viewed by a bank or lender, for example if you need a copy of your own history and score.
Multiple credit checks within a similar time frame could hurt your credit score and see all of the claims you have made for credit products rejected. This usually happens when you make multiple requests for a product at a time. Lenders view this kind of behavior as risky and lacking in discipline, which can result in your application being rejected. And a rejected credit application will hurt your credit score
This is why you want to be sure that if you take a look at your credit score or request a copy of your credit history, than a soft credit check alone occurs.
How often should you check your credit score?
Your credit score and credit history are worth checking out for several reasons, including:
- You want to apply for credit products and need to make sure your credit score is within an allowable range.
- You were waiting for a default event or other negative event to be removed from your report.
- Your score has changed significantly and you need to check for incorrect or fraudulent behavior.
You can check your credit scores as often as you like, with experts recommending that you review them once a year or as often as once a month. There are many ways to view your credit scores from online providers. But ideally, you’ll want to use a platform that provides this service for free and, more importantly, only offers smooth credit check.
RateCity allows Australians to get their credit scores from Experian and Equifax for free without affecting their credit rating. A smooth credit check is performed so that your credit score review will not appear on your credit report.
In addition, it is generally recommended that you obtain a free copy of your credit history from Experian and Equifax at least once a year. This is because these reporting offices are obligated to give you a free copy of your report every year. If you need to consult it for any other reason, for example if you suspect that an error has occurred, remember that the office may charge you for this service.