The rules of credit scoring in Victoria (and rest of Australia for that matter) have changed. Now, the major banks are required to submit comprehensive credit data to the credit bureaus. In other words, it mandatory for them to report positive behaviors, not just negative ones.
If you are buying a piece of Kurunjang, Exford, Toolern Vale, Aintree or Burnside real estate, you need to be more particular with your financial habits, for even the little things you do can count.
However, this new government policy does not change the fact that Equifax and Experian, two of the most popular credit bureaus in Australia, calculate credit scores in their own way. What the former considers excellent credit might only be good for the latter.
Fortunately, there are things you can do to please both Equifax and Experian at the same time. Below are the best practices to get high credit scores from both companies.
Pay Your Utility Bills on Time
Utility providers might not share the payment information of their customers to the credit bureaus, but they report defaults. Not paying your bills for two months constitutes defaults, which will appear and stay on your credit file for up to seven years.
Keep Your Oldest Credit Accounts Active
Just like in the United States, Equifax and Experian do care about the longevity of credit accounts of consumers in Australia. Each of them can average the age of all accounts, active and closed, to put a number on the experience of a consumer in managing credit.
For this reason, you should do your best to keep your oldest credit card alive as much as possible. Closing it in favor of a new one can devastate your credit big time for a long time.
Avoid Overusing Your Credit Cards
Maxing out your credit card limits can affect your creditworthiness in the eyes of both Equifax and Experian. Starting 1 July 2019, Westpac, NAB, ANZ, and CommBank will be required to share the maximum credit amount available for each account to help either credit bureau analyze the credit utilization of a person.
Do Not Apply for Credit Frequently
New credit is a universal credit scoring factor. Applying for a credit card or a loan will inevitably lower your credit scores from Equifax and Experian to a small extent.
However, multiple inquiries done over a short period can ring the alarm bells, for such negative items can indicate that you are cash-strapped and in great need of debt.
Focus on Your Two-year Payment Histories
Since the credit scoring system change, your monthly repayments in the past two years will begin appearing on your credit file. If these are the only histories available on your credit reports, then make sure you have zero overdue payments in any of your financial obligations 24 months before shopping around for home loans.
Generally, it is easier to score high from Experian than it is from Equifax. Nevertheless, developing sound financial habits should increase your credit scores from both credit bureaus effortlessly and more quickly.