According to Australian Government statistics, over 90% of vehicles purchased in Australia are purchased on finance. So it goes without saying that financing a car is quite common these days. But how much of an impact does applying for a car loan have on your credit score? Read on to find out more.
What is my credit score?
Equifax is the leading provider of credit information and analysis in Australia and as far as most finance goes; it is the Credit Score that matters most. Your Equifax Credit Score is a number between 0-1200 and in very simplistic terms, the higher your Equifax Credit Score, the better your credit profile. Your Equifax Credit Score is used by financiers along with other information you provide to help determine your suitability for finance.
What affects my credit score?
Unfortunately, there’s no way around it, if you’re applying for any type of finance, chances are that the financier will use information about you including your Credit Score to assess your eligibility for finance. When you apply for a car loan, a home loan or even a phone contract or utility account, the financier or utility provider will check your credit file and generally leave a credit enquiry on your file. A large number of credit enquiries can affect your credit score along with unpaid accounts and defaulted payments.
Unfortunately, financiers also tend to be wary of lending to people who have a large number of credit enquiries in a short space of time.
What can I do to protect my credit score?
In simple terms, it is important to make sure all your accounts are paid up to date and on time. If you’re moving house, make sure to contact any finance companies and utility providers that you have accounts with to update your contact details.
Identity fraud has also been a problem in Australia in recent years. Therefore, it is important to know what’s on your Credit Report by getting a Free copy of your Equifax Credit Report every year. Make sure all details on your report are accurate and that you question anything on your Credit Report that you aren’t sure about.
You can also protect your credit score by limiting the number of times you apply for any type of credit such as car loans.
How can I shop around for the best car loan without hurting my credit score?
Luckily, all credit enquiries aren’t created equal. There are two different types of credit enquiries, hard and soft. Hard enquiries are ones that are visible on your credit file, can be seen by potential financiers and can impact your credit score. Soft enquiries are virtually invisible enquiries which can be made by companies such as finance brokers like Loans For U so we are able to see what’s on your credit file without negatively affecting it. This allows our experienced Finance Consultants to assess which financier from our range of over 40 trusted Australian bank and non-bank financiers would be able to give you the best possible finance options to suit your individual needs. Your Loans For U Consultant will discuss your finance options with you and only submit your application to the financier who we believe; from our years of industry experience would likely give you the best possible finance approval.
This means that we can help you to save time and money comparing your finance options and limit your credit enquiries in the process. So for an obligation-free discussion about your car finance or any other finance needs, call our friendly team today on 1800 538 287 or simply apply online.