There’s too much debt floating around in the world today, and people are greatly underestimating the importance of keeping and maintaining a strong credit rating. If you’re not diligent and considered when it comes to making your purchases and fulfilling your financial obligations your credit rating can take a substantial hit and your ability to perform a range of financial transactions in the future can be seriously affected. We’re going to take a look at the biggest factors that are affecting your credit rating, so you know what to be on the lookout for and maintain a good credit score.

Credit rating systems in Australia

The Australian credit reporting system takes into account not only the negative information that is currently on a person’s credit file, but also the positive factors. So everything goes into account when determining the sort of score you have on your file.

In Australia average credit score stands at 749, but any score that lies between 622 and 1200 is generally considered to be pretty good. Any higher and you’re well on the right track, any lower and you’ll have a bit of work to do when it comes to getting your credit rating up to an acceptable level.

Negative credit information that can decrease your score

There’s a range of information associated with your financial history that offers insight into your creditworthiness. These are taken into account in determining your ultimate credit score:

• Any credit applications and enquiries you’ve made in the last five years, and whether or not these applications have been successful or unsuccessful and why.
• Payment records from your current credit accounts. Not only does this include your credit cards, but it also includes your mobile phone, gas and electricity accounts.
• And overdue accounts or payment defaults in your history and any failure to meet payments.
• Any bankruptcies or insolvencies you’ve been involved in as well as court judgements.
• A range of public record information, including directorships and proprietorships.

Positive credit information that can boost your score

In Australia, there is a range of positive credit information that can significantly increase your credit score and overall perception of creditworthiness – so long as you’ve been in control of your finances. Some positive factors include:

• The types of credit accounts you’ve owned (such as a credit card or home loan) and the record of successfully meeting financial obligations in relation to these accounts.
• Credit limit usages and account balance details..
• Successful repayment history which shows an overall ability to meet your financial obligations.

Ways you can increase your credit score

That being said, if you find yourself with a low ranking it’s not necessarily all doom and gloom – there are a number of measures you can take to significantly improve your score. These include:

• Applying for a credit card – as long as you are in a position to make repayments, having a credit card can actually increase your credit rating. Just make sure you take care of all your repayments on time, and avoid charging too much to your credit card.
• Make appropriate applications for credit – submitting multiple loan applications and having them rejected can have a substantial impact on your overall credit rating, so if you need to make a loan application make sure you do your research first and make sure you’re definitely in a position to do so. If you’ve made multiple inquiries in a short amount of time some credit providers may look upon it negatively and this will seriously affect your rating.
• Paying off bills, loans or credit cards – making sure you’ve met all your different financial obligations is quite important when it comes to determining your overall credit rating. If you fail to do so, it can have a really negative impact on your credit rating. Something as small as a 30-day late payment can decrease your credit rating and overdue accounts are kept on your file for up to five years, so it goes without saying – don’t risk it; pay on time.
• Keep track of your credit report and score – this is especially important if you’ve changed jobs or moved house recently, and  you should really be checking your credit rating at least every one to two years to ensure there aren’t any errors that have passed through. View this link for more information on obtaining a copy of your credit report.