Credit Savvy urges young Australians to be proactive about managing their credit behaviour
Consumer advocate, Credit Savvy, is encouraging young Australians to take an active interest in their finances today to help set them up and avoid missing out on the great Australian dream of owning their own home in the future.
Recent data from credit reporting body, Experian, shows young Australians aged 18-24 years have the lowest average credit score at 564, followed by 25 – 34 year olds at 610. Both bands are below the national average of 649.
Credit scores and credit file information can be used by lenders to assess the credit worthiness of an individual and the likelihood that he or she will be able to repay a loan in the future. Higher credit scores can suggest to lenders that an individual has a history of financial responsibility and is less risky to lend to.
Experian data indicates that older age groups fare better in the credit score stakes, with average credit scores of 652 for 35-44s, 682 for 45-54s and 735 for over 55-year-olds.
These findings come at a time when the spotlight is on housing affordability and home ownership for the next generation. Median house prices have skyrocketed in Sydney by 22.9% in one year to reach the $1 million mark, and by 10.3% in Melbourne to reach $668,030, according to the latest Domain Group House Price report. Nationally, the median increased by 11.7% year-on-year to reach $701,827.
Managing Director of Credit Savvy, Dirk Hofman, is concerned that younger consumers may be unaware that their credit behaviour can stay on their credit file for a number of years and potentially impact their ability to access credit in the future.
“Every time you apply for a credit card, that enquiry stays on your file for up to five years. If you make too many enquiries in a short time frame, you could lower your credit score,” he said.
“It’s tough enough saving up for a deposit without getting there and realising that you might’ve done something to jeopardise your credit reputation years earlier. I’d encourage young Australians to check their credit score and credit file to see where they stand.”
Credit Savvy provides consumers with free, ongoing access to their Experian credit score, as well as credit alerts to notify them of key changes to their Experian credit file information.
Mr Hofman said, “Even if younger consumers don’t intend to apply for a home loan or personal loan for a few years, if they are proactive about managing their credit reputation now, they could set themselves up better for the future.”
Credit Savvy’s Top Tips for Young Australians:
1. Make sure you pay your bills on time as defaults can stay on your credit file for up to 5 years
2. Check and monitor your credit score at www.creditsavvy.com.au
3. If you’re sharing a house or living at home, consider building up an active credit file that shows a history of good credit behaviour.
4. Shop around and do your homework before applying for credit and avoid making too many credit enquiries in a short space of time
5. Try to stay away from specialty finance providers like payday lenders
About Credit Savvy
Credit Savvy is a free online service that helps Australians understand their credit reputation and how they can actively manage it. It uses data from credit reporting body Experian to provide Australians with free access to their credit score, free monthly re-scores and the ability to track their score over time and receive alerts for any key changes to their Experian credit file.
Changes to the Australian Privacy Act in 2014 allowed more information about each consumer’s credit behaviour to be included in their credit file, such as credit limits and repayment history. In doing so, Australia is moving towards a system of Comprehensive Credit Reporting which has been adopted in other countries, such as the US, UK and NZ. Approximately 80% of credit active Australians don’t know their credit score.
For more information, please visit www.creditsavvy.com.au
Jo Balfour / Shuba Paheerathan
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