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A deep dive on credit scores · She's On The Money

0:00
Speaker 1: She's on the Money, She's on the Money.
0:23
Speaker 2: Hello, and welcome to She's on the Money, the podcast
0:26
Speaker 2: for millennials who want financial freedom. Today we're talking about
0:30
Speaker 2: credit scores and specifically how we can improve ours and
0:33
Speaker 2: the impact that improvement could have on our future money goals.
0:38
Speaker 2: My name is Georgia King and joining me for the
0:41
Speaker 2: final Wednesday episode of the podcast this year.
0:45
Speaker 3: Not again, It's upd How did we get here? My friend?
0:49
Speaker 3: I actually am very unsure. This year has been an
0:52
Speaker 3: absolute blur. But do you know what's not a blur?
0:55
Speaker 3: The clarity that is pertained in credit scores? Hey, oh
0:59
Speaker 3: she's good to watch. She does It was a smooth
1:01
Speaker 3: little trendslas really accidental. I just thought I was quite funny.
1:05
Speaker 3: But we'll go from there. What do you reckon? Ah? Yeah,
1:08
Speaker 3: I loved it. I loved it. It's been a.
1:10
Speaker 2: Good six months I think since we last spoke about
1:14
Speaker 2: credit scores, and for anyone who has had like a
1:16
Speaker 2: long year, I guess we all have. They're feeling a
1:19
Speaker 2: little tired, they don't quite remember what's up, what a
1:22
Speaker 2: credit score is? Can you give us a cheeky little refresher?
1:26
Speaker 2: Oh little ambulance.
1:27
Speaker 3: Has just gone past. Oh no, I hope they were
1:29
Speaker 3: all right. Me too.
1:31
Speaker 2: Well.
1:31
Speaker 3: I think talking about credit scores is important, and we've
1:34
Speaker 3: obviously done a whole episode on it historically, but I
1:37
Speaker 3: don't think there's too much content when it comes to
1:40
Speaker 3: credit scores, because we're still getting lots of questions around
1:44
Speaker 3: what it is and how it works and how you
1:45
Speaker 3: can improve yours and recently G and the reason we've
1:49
Speaker 3: picked this topic as well is because G and I
1:51
Speaker 3: have noticed in the Facebook group there's a lot of misinformation.
1:55
Speaker 3: We've obviously removed it. Don't worry, guys, it's not still
1:58
Speaker 3: there around getting credit cards to improve credit scores and
2:02
Speaker 3: very American ways of approaching things. And I just think
2:05
Speaker 3: it's worth another episode and another conversation because, to be
2:09
Speaker 3: quite frank, you do not need to have a credit
2:12
Speaker 3: card in Australia to establish a good credit score. And
2:15
Speaker 3: I said this on one of the posts last week
2:18
Speaker 3: in the Facebook group. The actual reality of the situation
2:22
Speaker 3: is in twenty twenty one slash twenty twenty two, you
2:25
Speaker 3: don't need a credit score for anything other than credit.
2:28
Speaker 3: The only reason someone would have a credit card is
2:30
Speaker 3: literally to rely on credit and there's obviously, you know
2:33
Speaker 3: lots of nuances to this, like g you might go
2:36
Speaker 3: will V, I've got one because I want the points.
2:37
Speaker 3: It's like great, but there's no actual need for one,
2:41
Speaker 3: Whereas historically you might have needed one to travel overseas,
2:45
Speaker 3: or you might have needed one to check into a hotel,
2:48
Speaker 3: or you might have needed one for a particular type
2:50
Speaker 3: of activity that you were doing, whereas that's now not
2:54
Speaker 3: the case. Because of the way visidebit cards work and
2:57
Speaker 3: the fact that we all have access to these options,
3:01
Speaker 3: you don't actually ever need a credit card anymore. It's
3:05
Speaker 3: a personal choice, and I think it's really important to
3:07
Speaker 3: clarify there. I'm not saying that some people don't rely
3:09
Speaker 3: on credit cards. That is not the conversation we are
3:12
Speaker 3: having here. What we are saying is to do things
3:15
Speaker 3: in Australia, you do not need a credit card, whereas
3:18
Speaker 3: the same as not true in America. And I think
3:21
Speaker 3: that we get a little bit confused around what those
3:23
Speaker 3: nuances are and how that works, so that sometimes when
3:26
Speaker 3: we're asking in questions, especially in a Facebook group, people like,
3:28
Speaker 3: oh my gosh, no, you need a credit card because
3:30
Speaker 3: you need to start building your credit score, or you're
3:32
Speaker 3: going to go to Christmas Day drinks with the family,
3:35
Speaker 3: and Uncle Greg's going to turn around and be like, oh, well,
3:37
Speaker 3: you need to get a credit card, because like, you'll
3:38
Speaker 3: never get a car loan if you don't get a
3:40
Speaker 3: credit card. Got to start building your credit early, Darlin, Like,
3:43
Speaker 3: that's not actually how it works.
3:45
Speaker 2: Uncle Greg got you just a little tangent when you
3:49
Speaker 2: said uncle gregor I could think about was cousin Greg.
3:53
Speaker 2: You're a Succession fan, Victoria Devince.
3:54
Speaker 3: I don't even know what you're talking about. Okay, don't
3:57
Speaker 3: worry about it. That's a little shout out to my
3:58
Speaker 3: girls who loves Succession from the finale watching Oh, VICKI
4:05
Speaker 3: d I'm sorry. Yeah, I just TV show that's like
4:10
Speaker 3: ever been made. That's all you need to know if
4:12
Speaker 3: you watch Sex in the City. I don't know about you, friends.
4:18
Speaker 3: There's a lot of TV shows that I would say
4:20
Speaker 3: are really really good. Below Deck also a really good one.
4:23
Speaker 3: I recently didn't add for Hayu, and I wasn't joking
4:26
Speaker 3: when I said that. I was completely obsessed with Below Deck.
4:28
Speaker 3: It's absolutely trash, but it is so good.
4:31
Speaker 2: George. My mum also loves Below Deck, so shout out
4:35
Speaker 2: to Jolly King, I've been named and shamed on the pod.
4:38
Speaker 3: Ah, well, I throw myself under the bus. She just followed.
4:41
Speaker 3: I really appreciate her support.
4:44
Speaker 2: Okay, so cousin Greg chat asidev Our credit scores essentially
4:49
Speaker 2: just a measurement like a number of how how good
4:55
Speaker 2: of a what am I trying to say.
4:57
Speaker 3: Good of a person? You are? At credit essentially is
5:00
Speaker 3: that it? That's it, that's it. So your credit score
5:03
Speaker 3: is a number that helps lenders and banks work out
5:07
Speaker 3: how safe you are to lend to. So it's actually
5:10
Speaker 3: based on all of the information that is contained in
5:12
Speaker 3: your credit report. So this could be history of your
5:15
Speaker 3: borrowing and whether you've made repayments on time or not,
5:18
Speaker 3: or whether you've paid bills on time or not, or
5:21
Speaker 3: if you've ever defaulted on something. So a good example
5:24
Speaker 3: of this is one time I used to have my
5:26
Speaker 3: phone plan on direct debit and I changed over the
5:29
Speaker 3: debit card that it was associated with, completely forgot was
5:33
Speaker 3: ignoring the messages from Vhotophone and completely forgot have my
5:37
Speaker 3: phone cut off. Because I'm a proper adult, ended up
5:40
Speaker 3: getting it back pretty quick. Smart because when they actually
5:42
Speaker 3: take that service off, you you're like, well, I actually
5:45
Speaker 3: need my phone, so strange, I will pay that bill now.
5:49
Speaker 3: So I did that, But I actually had a default
5:51
Speaker 3: for a long time on my credit history, because guys,
5:54
Speaker 3: this wasn't last week. This was like maybe in like
5:58
Speaker 3: I would have been twenty twenty one maybe, But way
6:00
Speaker 3: back then I had a default on my credit history
6:03
Speaker 3: because I had defaulted on a payment. I had a
6:05
Speaker 3: bill that was due and I didn't pay it, And
6:06
Speaker 3: that is the type of thing that actually shows up
6:09
Speaker 3: on your credit history. So it is really important for
6:12
Speaker 3: you to consider all of those things, not just well, Victoria,
6:16
Speaker 3: I've never had a personal loan or a credit card before,
6:18
Speaker 3: so I shouldn't have a credit history. That's not actually
6:21
Speaker 3: the case. It includes literally all of those little bills,
6:25
Speaker 3: which is why it's also super important if you're in
6:28
Speaker 3: a situation where you have housemates to make sure that
6:30
Speaker 3: you're not just putting your name on the line when
6:33
Speaker 3: it comes to paying the bills, just because you've actually
6:36
Speaker 3: got to take that as a pretty serious responsibility because
6:39
Speaker 3: if you're not paying the bill, then ooh, you're going
6:42
Speaker 3: to end up in a little bit of a pickle.
6:44
Speaker 3: And if your old housemate isn't transferring the funds and
6:46
Speaker 3: you can't afford to pay the bill, it could actually
6:49
Speaker 3: significantly impact your credit report.
6:51
Speaker 2: M okay, and then what are the negative consequences of
6:55
Speaker 2: that fee? Like what does having a bad credit score
6:58
Speaker 2: actually mean for us?
7:00
Speaker 3: So g credit scores are super important in the world
7:03
Speaker 3: of borrowing because many lenders actually base their application assessments
7:08
Speaker 3: on their applicants credit score. So in particular, we're talking
7:11
Speaker 3: here about top tier lenders. So that is actually like
7:15
Speaker 3: the big four banks and those names that you know,
7:17
Speaker 3: So we're not talking about the credit unions and all
7:19
Speaker 3: of the other options to borrow. We're talking like, nah,
7:21
Speaker 3: but Westpac, A and Z and what was it com
7:24
Speaker 3: Bank if I remember off the top of my head.
7:28
Speaker 3: And these lenders are usually and I might be speaking
7:32
Speaker 3: out of term here, but they're usually super strict. So
7:34
Speaker 3: they are a lot more strict than those second tier
7:36
Speaker 3: lenders or credit unions because they can be really picky.
7:40
Speaker 3: So if you want to get credit through one of
7:42
Speaker 3: those options, then it is really important to have a
7:44
Speaker 3: good credit score. But it's really important to have a
7:47
Speaker 3: good credit score regardless, So don't go, hey THEE well,
7:50
Speaker 3: I just won't go with one of the big four banks.
7:52
Speaker 3: That's fine, it's going to impact anything. And a bank
7:55
Speaker 3: is going to want you to have a really good
7:56
Speaker 3: credit score because a good credit score means you're more
7:59
Speaker 3: like to be able to pay the loan back, which
8:01
Speaker 3: in turn means that they're more likely to be able
8:04
Speaker 3: to offer you a better interest rate because you're less
8:07
Speaker 3: risky to them and go through the process a whole
8:10
Speaker 3: heap easier. And when push comes to shove at some
8:14
Speaker 3: point in your life, you are very likely going to
8:16
Speaker 3: need to rely on credit to take the next step
8:19
Speaker 3: in your wealth journey.
8:21
Speaker 2: And when it comes to actually finding out what our
8:23
Speaker 2: credit score is v I'm having flashbacks something about.
8:27
Speaker 3: Like Expleurian or.
8:31
Speaker 2: Exposion, something like that, Like it was a fun alien
8:35
Speaker 2: like name.
8:36
Speaker 3: Is that right? Yeah? Ilion or Equifax or let's be real,
8:42
Speaker 3: they sound like spaceships. They're not spaceships. They're actually they're
8:46
Speaker 3: actually companies that check your credit score and their credit
8:49
Speaker 3: reporting bodies, which is much sexier spaceship.
8:52
Speaker 2: Yeah, not quite as interesting as aliens, But that's okay.
8:56
Speaker 2: Do we just google? You can just google any of
8:59
Speaker 2: those three. You can also head to our friend Wiser's website,
9:03
Speaker 2: so that's WISR. They're not sponsoring this or anything like that.
9:07
Speaker 2: It's just a good website and I think they're good
9:10
Speaker 2: eggs doing good things. But they use one of the
9:13
Speaker 2: credit reporting bodies as well. It's just a really really
9:15
Speaker 2: good user interface. So at the end of the day,
9:19
Speaker 2: when it comes to credit files, you can pay for
9:21
Speaker 2: reports or you can get free ones, and by law
9:24
Speaker 2: you are actually entitled to get one free credit report
9:27
Speaker 2: every twelve months or within ninety days of receiving a
9:31
Speaker 2: credit rejection, and that's pretty cool. Or on top of that,
9:35
Speaker 2: you can always just pay a small fee to request
9:37
Speaker 2: still report at any time, but money win. Every twelve months,
9:41
Speaker 2: you can check your credit report for free, and if
9:44
Speaker 2: you're not already doing that, it's amazing. So in terms
9:47
Speaker 2: of what that actually looks like, v is it a
9:50
Speaker 2: scale of.
9:52
Speaker 3: One to one hundred? Or where does it sit in americle?
9:56
Speaker 3: So it could sit on one of two different scales.
9:59
Speaker 3: It could be a score out of twelve hundred or
10:01
Speaker 3: it could be a score out of one thousand, depending
10:04
Speaker 3: on what company you go with. So if your credit report,
10:08
Speaker 3: you've downloaded it, you're having a look at it and
10:10
Speaker 3: it's out of twelve hundred. Then a rule of thumb
10:13
Speaker 3: score is that anything above eight hundred and fifty three
10:17
Speaker 3: is excellent, whereas anything above six hundred and sixty one
10:21
Speaker 3: is considered good. Whereas if your credit report shows a
10:25
Speaker 3: score out of one thousand, then anything above six hundred
10:28
Speaker 3: and ninety is excellent and five hundred and forty is good.
10:32
Speaker 3: Does that make sense? You don't want to like muddle
10:35
Speaker 3: them up because if you're like, oh, my gosh, V
10:37
Speaker 3: said on the pod that six hundred and sixty one
10:40
Speaker 3: is good, well, actually, oh, that's not the scale to
10:44
Speaker 3: go off if you're only going out of one thousand.
10:45
Speaker 3: So definitely have a look at which scale your credit
10:48
Speaker 3: report is using and take my information as needed appropriately
10:53
Speaker 3: for sure.
10:55
Speaker 2: And it's a myth, isn't it fee that you can
10:57
Speaker 2: only check your credit score once a year, Like I
11:00
Speaker 2: think there was conversation in the group last time that
11:03
Speaker 2: we did an episode on credit scores, and people were
11:07
Speaker 2: saying you might be penalized or your credit score might
11:10
Speaker 2: go down if you're seen to be looking at your
11:12
Speaker 2: credit score too much.
11:13
Speaker 3: So that's different. So there's a difference between a credit
11:16
Speaker 3: inquiry and a credit score check. So a credit inquiry
11:21
Speaker 3: is something where a phone company or a bank might
11:24
Speaker 3: go and do a full inquiry on your account, whereas
11:28
Speaker 3: you getting your credit reports score is just you getting
11:30
Speaker 3: the score for personal use, and these two things are
11:33
Speaker 3: very different. So don't be scared away by going, oh, V,
11:36
Speaker 3: I don't want to negatively impact my score by checking
11:39
Speaker 3: what it is. That's not actually a thing, my friends.
11:42
Speaker 3: But as you said before, g it is a myth
11:44
Speaker 3: that you can only check it once a year. The
11:47
Speaker 3: reality is you can check it once a year for free.
11:50
Speaker 3: If you'd like additional reports, you can absolutely pay a
11:52
Speaker 3: small fee for them at any time.
11:55
Speaker 2: So, if I may be so bold, what's your credit score?
11:59
Speaker 2: A little miss?
12:00
Speaker 3: That is actually quite a brazen question, but I'm happy
12:03
Speaker 3: to share with the team. But keep in mind this
12:07
Speaker 3: file was done like at the end of twenty twenty,
12:10
Speaker 3: and the reason I still have this file is because
12:13
Speaker 3: I was submitting a homeland application and I haven't applied
12:15
Speaker 3: for any credit since then, which is probably a good thing,
12:18
Speaker 3: let's be honest. But when I did it, I did
12:21
Speaker 3: it through Equifax and I got my score back as
12:25
Speaker 3: eleven hundred and sixty six, which I think is pretty
12:28
Speaker 3: good and like minor flex like that means I had
12:31
Speaker 3: a really good credit score. But in saying that, g
12:35
Speaker 3: wouldn't you be really disappointed If I was like, oh,
12:37
Speaker 3: my credit score is twelve, you'd be like, isn't she
12:41
Speaker 3: like meant to know money? I don't know.
12:45
Speaker 2: Hey, you always say do as I say, not as
12:47
Speaker 2: I do. I feel like that's that's a wikidi catch
12:50
Speaker 2: phrase as well.
12:51
Speaker 3: It is very true. And to give you a little
12:53
Speaker 3: bit more information, I'm not going to share this file
12:55
Speaker 3: because it's very personal, but it actually has so much
13:00
Speaker 3: information on it. So when I scroll through, it gives
13:02
Speaker 3: you the headlines. It gives you the adverse on files,
13:05
Speaker 3: so it lets you know if there's any issues up front.
13:08
Speaker 3: It says does she have any insolvencies or actions? Guys?
13:11
Speaker 3: I have zero? Says does she have any business relationships,
13:14
Speaker 3: and it says that I do have a fair few.
13:16
Speaker 3: It also says really quickly, what's her total limit? And guys,
13:20
Speaker 3: my total limit at application time was two thousand dollars
13:24
Speaker 3: hashtag baller and my defaults were zero, which is really
13:29
Speaker 3: good obviously, but I don't think anybody expected anything differently.
13:34
Speaker 3: But if you're looking at your credit report, and you're
13:36
Speaker 3: looking at those headlines and something's not making sense. For example,
13:41
Speaker 3: if there was a default on my account still and
13:43
Speaker 3: I was like, I actually don't have anything that I've
13:46
Speaker 3: defaulted on. You need to investigate that, and there'll be
13:49
Speaker 3: further information further down on your report. But that's also
13:53
Speaker 3: a really good point in time where you go, maybe
13:55
Speaker 3: I should have a look into this and not just
13:58
Speaker 3: have a look at the headlines and see what that
14:00
Speaker 3: could be, or follow up with the company if something
14:03
Speaker 3: doesn't make sense to you, because credit reports should be
14:07
Speaker 3: really straightforward and make a lot of sense to you.
14:09
Speaker 3: For example, Georgia, it says here inquiry Telstra, I'm like, okay,
14:14
Speaker 3: no problems ages ago. I inquired on a new internet
14:17
Speaker 3: package for the office. Like that makes sense, Whereas if
14:21
Speaker 3: I'd never had anything to do with Telstra, I'd be like, hmm,
14:24
Speaker 3: that seems familiar. I do know what Telstra is, but
14:27
Speaker 3: I've never personally contacted them. That's where you might go, hmm,
14:31
Speaker 3: maybe I should follow up on that and have a
14:32
Speaker 3: bit of a chat with Telstra and see if I
14:35
Speaker 3: actually have a relationship with them or not. And George,
14:38
Speaker 3: as you would know, a couple of weeks ago, we
14:40
Speaker 3: actually had someone on the show whose identity was stolen
14:44
Speaker 3: and a phone pan was taken out in their name.
14:46
Speaker 3: That's why we want to be really on top of
14:48
Speaker 3: these things hundred percent. They let's move on now to
14:53
Speaker 3: talking through some strategies of actually improving our credit score
14:57
Speaker 3: if it is a little bit rubbish few I thought
14:59
Speaker 3: you we're going to ask me more about the information
15:01
Speaker 3: on my credit report. But that's all good. I'm happy
15:04
Speaker 3: to be moving on.
15:07
Speaker 2: The first cab off the rank is too. Simply pay
15:11
Speaker 2: your bills on time. How does this help us out?
15:14
Speaker 2: That is an absolutely great tip. And as I said before,
15:17
Speaker 2: we just don't want a default. But that is not
15:19
Speaker 2: the only reason.
15:21
Speaker 3: So although your credit report is not actually going to
15:23
Speaker 3: include information about you actually paying them on time and
15:26
Speaker 3: detailed descriptions of your utilities bills, it's really important to
15:30
Speaker 3: pay these bills on time because you're demonstrating a general
15:33
Speaker 3: bill paying reliability, which if you ask me and ask
15:37
Speaker 3: someone who's going to lend you, that's a pretty good
15:40
Speaker 3: habit to.
15:40
Speaker 2: Be inm Okay, So that's it. It just makes us
15:43
Speaker 2: look reliable and trustworthy.
15:46
Speaker 3: It makes us look reliable, makes us look trustworthy, but
15:49
Speaker 3: also it means that you're going to avoid ever being
15:53
Speaker 3: put into a default. So if you're not making payment
15:55
Speaker 3: on these services, your credit provider might actually refer you
15:58
Speaker 3: to a debt collector or port your debt to a
16:01
Speaker 3: credit reporting agency, which means that they would ask them
16:04
Speaker 3: to record your default on your credit report, which you
16:07
Speaker 3: don't want to happen. And that can happen if you
16:09
Speaker 3: don't pay your bills. So it seems little, and it
16:12
Speaker 3: seems like sometimes people are like, oh, v I couldn't
16:14
Speaker 3: pay my water that month. Like I get it. We
16:17
Speaker 3: have all gone through some level of financial hardship. And
16:21
Speaker 3: that's why I always say, please, don't put your head
16:23
Speaker 3: in the sand. Call you are a valley water, let
16:25
Speaker 3: them know, say hey, I'm really sorry, I'm not going
16:27
Speaker 3: to be able to make that payment this month, and
16:29
Speaker 3: I guarantee you they will have some way that you
16:33
Speaker 3: can push it out or get an extension on that payment.
16:36
Speaker 3: I'm not saying you can do that forever, because that's
16:38
Speaker 3: not an option, but if you're going to be late
16:40
Speaker 3: on a payment, please call those companies because it could
16:44
Speaker 3: one save your credit report, but two, my friend, it
16:46
Speaker 3: will take a whole heap of stress off knowing that
16:49
Speaker 3: you don't have to make that payment for another month
16:51
Speaker 3: or a couple of weeks. And at the end of
16:53
Speaker 3: the day, those companies, they just want to get paid.
16:56
Speaker 3: So if you're calling and saying, hey, can't make the payment,
16:59
Speaker 3: but I really want to, can you help me make
17:01
Speaker 3: a plan to do that, They're gonna be like, great,
17:03
Speaker 3: do you know what? This is so much easier than
17:05
Speaker 3: chasing you down later down the track when you're not
17:07
Speaker 3: paying it all and you aren't answering our.
17:09
Speaker 2: Calls precisely, And you definitely won't be the first person
17:13
Speaker 2: to ever to have ever called up and asked for
17:15
Speaker 2: an extension, right, No, exactly, And it happens all the time.
17:19
Speaker 3: And I've said this on the podcast before, so I
17:22
Speaker 3: do apologize. I don't want to sound like a broken record.
17:24
Speaker 3: But if you're calling, you're not going to get the
17:26
Speaker 3: CEO on the phone. It's not going to be some
17:29
Speaker 3: dude who's going to be like, oh my god, she
17:30
Speaker 3: can't pay her bills. No, it's going to be someone
17:33
Speaker 3: just like you that's going to be like, don't worry,
17:34
Speaker 3: g I got you. Let's make a plan you. Thank god.
17:37
Speaker 2: I called because I felt like crap, Yeah, for sure,
17:40
Speaker 2: for sure, Okay. Our next to PV is to reduce
17:44
Speaker 2: the limits that you have on your credit cards.
17:47
Speaker 3: How does this work? So when it comes to reducing
17:51
Speaker 3: the limits on our credit cards, we're doing two things.
17:53
Speaker 3: We are one putting ourselves in a position where we
17:55
Speaker 3: are less likely to be able to go into significant debt.
17:59
Speaker 3: And the second tip G only really applies when we're
18:02
Speaker 3: going for a loan, is that when our lenders look
18:06
Speaker 3: at our credit and what we have access to, they
18:10
Speaker 3: don't go, hey, gee, you've got a five thousand dollar
18:12
Speaker 3: credit card. No idea if you actually do. But this's
18:14
Speaker 3: great example, Gee you've got a five thousand dollar credit card.
18:17
Speaker 3: They don't care what's on it. They assume it's completely
18:20
Speaker 3: maxed out. So instead of saying Georgia has access to
18:24
Speaker 3: five thousand dollars in credit, they say Georgia has five
18:28
Speaker 3: thousand dollars worth of debt, and they will look at
18:30
Speaker 3: you that way and go, okay, call she has access
18:34
Speaker 3: to that, So we're just going to call it debt.
18:36
Speaker 3: And the reason they do that is because they could
18:39
Speaker 3: give you a loan tomorrow and you could still go
18:42
Speaker 3: into five thousand dollars debt tomorrow because you've got access
18:45
Speaker 3: to it. So it's not necessarily it's g good with
18:48
Speaker 3: her credit card or not. It's how much does she
18:50
Speaker 3: have access to at that point in time, and you
18:53
Speaker 3: will be assessed that way. So one of the tips
18:56
Speaker 3: is to actually bring down that level of credit and
18:59
Speaker 3: that will help you in a way that gives you
19:01
Speaker 3: access to more credit and more lending ability when you
19:04
Speaker 3: go for a home loan or a personal loan or
19:06
Speaker 3: whatever you're looking for, there you go.
19:09
Speaker 2: I feel like people wouldn't necessarily know that, especially if
19:12
Speaker 2: they are on top of their credit cards.
19:14
Speaker 3: That's really interesting. Yeah, look, I think it's important for
19:16
Speaker 3: people to look at reducing their credit limits regardless, just
19:19
Speaker 3: because I like the idea that people would have less
19:22
Speaker 3: access to being able to go into debt. I don't
19:24
Speaker 3: want you to have access to ten grand or thirty
19:27
Speaker 3: thousand dollars. Some of these credit limits honestly start to
19:31
Speaker 3: terrify me. However, I do know and I'm not saying
19:35
Speaker 3: don't have a credit card at all, because it is
19:37
Speaker 3: an absolute privilege to be in a position to say
19:40
Speaker 3: you don't need a credit card. Because there are some
19:42
Speaker 3: families some people out there that I need it. I
19:44
Speaker 3: cannot survive without it. I totally get it. I'm not
19:47
Speaker 3: saying that at all. I'm saying here are some tips
19:49
Speaker 3: and tricks that if you are trying to get a
19:51
Speaker 3: really good credit score, or go for a loan in
19:53
Speaker 3: the future, or you've been saving a butt off to
19:55
Speaker 3: buy your very first home, here are some tips and
19:58
Speaker 3: tricks that are going to put you in a more
19:59
Speaker 3: favorable position.
20:00
Speaker 2: Amazing already, guys, we will be back on the other
20:03
Speaker 2: side of the break to climb through our remaining tips
20:06
Speaker 2: for improving your credit score, So please don't go anywhere, okay.
20:11
Speaker 2: Our third tip here is that if you need help,
20:14
Speaker 2: you should seek it out.
20:15
Speaker 3: Yes and no G. Yes and no so G. I
20:19
Speaker 3: do not believe that you need to pay somebody to
20:21
Speaker 3: fix your credit report. You should absolutely be able to
20:24
Speaker 3: do that yourself. There are so many companies that I
20:26
Speaker 3: would call credit Tree that are going to say, oh
20:30
Speaker 3: my gosh, we can help you fix your credit score.
20:33
Speaker 3: We can actually, you know, stop paying things, we can
20:36
Speaker 3: negotiate a different debt agreement for you. Be incredibly careful
20:40
Speaker 3: because they are not always there to put you in
20:42
Speaker 3: the best possible position, and they are very likely to
20:45
Speaker 3: be charging you for something that you can incredibly easily
20:48
Speaker 3: do yourself. It gets me really worked out because the
20:52
Speaker 3: amount of people that I have spoken to from Shees
20:55
Speaker 3: on the money that are like, oh my gosh, Victoria
20:57
Speaker 3: actually paid this company to help me fix my credit
20:59
Speaker 3: score in like they ended up up telling me I
21:00
Speaker 3: had to do it myself, and it's like, yeah, that
21:02
Speaker 3: will happen, because often they don't actually have the authority
21:06
Speaker 3: to talk to your credit companies or talk to the
21:08
Speaker 3: credit score companies to actually fix those things for you,
21:12
Speaker 3: because you're the authorized person on that account. So what
21:15
Speaker 3: do they promise they'll do, Like how lots of things
21:19
Speaker 3: They'll say that they'll help you improve your credit score
21:21
Speaker 3: or get you a loan quicker. Paying a credit repair
21:24
Speaker 3: company is very unlikely to actually improve your credit score.
21:28
Speaker 3: So please don't get caught up in their fancy marketing
21:31
Speaker 3: and think, oh my gosh, I do have really bad credit.
21:34
Speaker 3: This sounds like it's going to fix my problems. That's
21:36
Speaker 3: not a thing. You actually do have to do the
21:38
Speaker 3: work yourself, and that sucks. But there are a number
21:41
Speaker 3: of things that you can do, and obviously we have
21:43
Speaker 3: touched base on a couple of them already.
21:47
Speaker 2: And I guess for you, like perhaps if you were
21:50
Speaker 2: really struggling, if you were in a lot of debt,
21:52
Speaker 2: always reaching out to the National Debt Help Plum, they
21:54
Speaker 2: got to create a plan and work your way out
21:56
Speaker 2: of that is definitely going to help your credit score
21:59
Speaker 2: down the line.
21:59
Speaker 3: Yes, they are never going to charge you to fix
22:01
Speaker 3: your credit score because they are good Eggs doing good
22:04
Speaker 3: egg things. Amazing, did anyone hear my stomach? Just then?
22:07
Speaker 3: Why did you get no? Unlucky? We've missed out on
22:10
Speaker 3: that quite the raw. I need a little snacky snack.
22:13
Speaker 3: I've got some chocolate here if you'd luck, But unfortunately
22:16
Speaker 3: we're recording online one day.
22:19
Speaker 2: Hopefully that's a thing, okay. V. The next little tipparu
22:22
Speaker 2: here is to take pause before applying for more credit.
22:26
Speaker 3: Yes, credit isn't going to fix credit. Getting another credit
22:30
Speaker 3: card to pay down a credit card that you owe
22:32
Speaker 3: money on is not the solution. Yet there are too
22:34
Speaker 3: many times that I speak to people who do do this,
22:37
Speaker 3: and the reason they do this is because it's a
22:39
Speaker 3: really quick solution to a problem that feels really overwhelming,
22:43
Speaker 3: when in reality, we need to sit down and work
22:45
Speaker 3: out our budget and our cash flow and what is
22:47
Speaker 3: actually going on. And sometimes we actually do have to
22:50
Speaker 3: reach out to the National Debt Helpline and say I
22:52
Speaker 3: genuinely need a hand. It is not always super easy
22:56
Speaker 3: to manage credit on our own.
22:58
Speaker 2: Okay, well said, they're v our last little tip here
23:02
Speaker 2: is to sort out our budget so that we can
23:04
Speaker 2: be less reliant on credit.
23:06
Speaker 3: I feel like this makes sense. Yeah, And I feel
23:08
Speaker 3: like that touches on what I was saying before. I
23:11
Speaker 3: don't think enough people have full control of their budgets.
23:15
Speaker 3: And I know that it sounds really dry and really
23:18
Speaker 3: bland and not very exciting. You go, vay, No one
23:21
Speaker 3: wants to have a budget. Those things are really restrictive,
23:24
Speaker 3: when in reality, a budget should absolutely not be restrictive.
23:27
Speaker 3: A budget should be reflective of the money that's coming
23:30
Speaker 3: into your account and what's going out and give you
23:33
Speaker 3: a really solid understanding of each and every single dollar
23:37
Speaker 3: and how you allocate that. It's not necessarily here to
23:40
Speaker 3: restrict you or shame you on what you're spending, but
23:43
Speaker 3: rather go, hey, what am I working with? Because it
23:45
Speaker 3: is so hard to make plans if you don't even
23:48
Speaker 3: know where you're starting from.
23:50
Speaker 2: Yeah, gotcha. Okay, so that rounds out all of our
23:53
Speaker 2: little tips for improving our credit score. V. I feel
23:58
Speaker 2: like though they were all really like inventative measures, is
24:01
Speaker 2: there a way of really like speeding up that process
24:05
Speaker 2: and achieving a perfect credit score?
24:07
Speaker 3: No, day, No there's not. And I am really glad
24:10
Speaker 3: you brought that up because so many times people like V,
24:13
Speaker 3: that doesn't tell me how to fix my credit score,
24:15
Speaker 3: and I'm like, well, actually that is how you fix
24:17
Speaker 3: your credit score. Like I know, they sound preventative, and
24:20
Speaker 3: we can all take a leaf out of that book
24:22
Speaker 3: and make sure that we're not doing those things or
24:24
Speaker 3: we are implementing those tips and tricks from the get go.
24:27
Speaker 3: But those tips and tricks are also the things that
24:29
Speaker 3: are going to help you improve your credit score. So unfortunately,
24:33
Speaker 3: there isn't a one size fits all person there's going
24:35
Speaker 3: to be able to come in and fix this for
24:36
Speaker 3: you. You actually do have to do it yourself. And that's
24:39
Speaker 3: why it's so important to be on top of your
24:41
Speaker 3: credit score regardless of where you are at in your
24:44
Speaker 3: finance journey, because if there's something wrong on it right
24:48
Speaker 3: now and you're not planning on getting any credit for
24:50
Speaker 3: the foreseeable future, or you're like ve, it's going to
24:52
Speaker 3: take me another five or seven years to save for
24:54
Speaker 3: a house. The last thing you need is to spend
24:57
Speaker 3: those five seven years saving Do then go do a
25:01
Speaker 3: credit inquiry when you're borrowing money for the house, to
25:03
Speaker 3: find out that somebody else has had a personal loaning
25:05
Speaker 3: in your name for the last five years.
25:07
Speaker 2: Yeah, definitely, definitely. To finish off today's episode, I thought
25:12
Speaker 2: it would.
25:12
Speaker 3: Be fun to.
25:15
Speaker 2: Throw some questions at you from the community. I love
25:18
Speaker 2: this credit score related of course, good, very on theme, precisely,
25:23
Speaker 2: very deliberate.
25:24
Speaker 3: I thought they were going to be completely off track,
25:26
Speaker 3: like thee what's your marga? Read a recipe and I'd
25:28
Speaker 3: be like, guys, you will find that on our Instagram
25:31
Speaker 3: feed now.
25:32
Speaker 2: Yeah, exactly, that's what the people really want to know.
25:36
Speaker 2: The first one here is from Natalie and it ties
25:38
Speaker 2: into exactly what you were just talking about.
25:40
Speaker 3: Fee.
25:41
Speaker 2: She's asked, how long does it actually take to improve
25:45
Speaker 2: your credit score?
25:46
Speaker 3: Natalie? It could take a couple of weeks, it could
25:48
Speaker 3: take a year. There is no one size fits all outcome,
25:52
Speaker 3: and it's all about proving a good track record. So
25:55
Speaker 3: if you're trying to go from like eight hundred to
25:59
Speaker 3: you know, maybe eleven hundred, that is going to be
26:02
Speaker 3: very different in time than if you've got a credit
26:05
Speaker 3: score of twelve and you need to go all the
26:07
Speaker 3: way up to eight hundred. So there are small things
26:10
Speaker 3: that you could tweak that have a big impact on
26:12
Speaker 3: your credit score. For example, if you got rid of
26:14
Speaker 3: a credit card or got rid of a debt. There
26:16
Speaker 3: are a few things that you could do that you
26:19
Speaker 3: know are going to make small but dramatic changes when
26:21
Speaker 3: it comes to lending. But if you have got a
26:24
Speaker 3: whole heap of defaults on your credit score, and you've
26:27
Speaker 3: got a whole heap of debt and a whole heap
26:28
Speaker 3: of credit inquiries, unfortunately, it's about consistency and then proving
26:33
Speaker 3: yourself and building your credit score back up. As I
26:36
Speaker 3: said before, there is not a company that can come
26:39
Speaker 3: in and fix your credit score, So please don't fall
26:42
Speaker 3: for that if that's the situation you were in. It's
26:45
Speaker 3: actually going to be about doing the work yourself, getting
26:48
Speaker 3: your budget together, understanding what that means, understanding what bills
26:51
Speaker 3: are coming in and making sure we're paying them on time,
26:53
Speaker 3: and just proving over a period of time that we
26:57
Speaker 3: are a good person to lend to.
27:00
Speaker 2: Perfect well said, thank you. My last question for you
27:04
Speaker 2: today comes from Sam, So she wants to know what
27:07
Speaker 2: you're meant to do if something looks wrong on your
27:10
Speaker 2: credit score. So she says that she downloaded her credit
27:13
Speaker 2: score from WISA.
27:14
Speaker 3: Good decisions. Yeah, great decisions. But there were two of
27:18
Speaker 3: her personal debts. One of her personal debts rather was
27:22
Speaker 3: listed twice. Okay, that is hard, but it's also fixable.
27:27
Speaker 3: So there are a couple of things. If you have
27:29
Speaker 3: a poor credit score or an error on your credit score,
27:32
Speaker 3: it actually can completely affect your ability to get loans
27:35
Speaker 3: or get approved for credit that you're applying for. And
27:39
Speaker 3: you have every right to get errors fixed for free,
27:42
Speaker 3: and you can arrange them yourself. So, as I said before,
27:46
Speaker 3: please don't rely on companies fixing these for you. Only
27:50
Speaker 3: the credit company and the company that lends you money
27:53
Speaker 3: is able to fix those things. Don't go through a
27:55
Speaker 3: third party, please. But the error of something appearing twice
27:59
Speaker 3: is actually quite common, which is sad but true, And
28:02
Speaker 3: that could be a error on the credit reporting agency side.
28:06
Speaker 3: So the credit reporting agency might have actually just wrongly
28:10
Speaker 3: reported your information. Or had it accidentally input twice. Sometimes
28:14
Speaker 3: you might see an error in your name or your
28:16
Speaker 3: date of birth, or your address might need updating. For example,
28:19
Speaker 3: Sam's debt was listed twice as the same, or the
28:22
Speaker 3: amount of debt that you owe is incorrect. So to
28:25
Speaker 3: fix these types of errors, you need to contact your
28:28
Speaker 3: credit reporting agency. So if that was Wiser, have a
28:31
Speaker 3: chat with them. If it was Equifax, have a chat
28:33
Speaker 3: with them and they might be able to fix it
28:35
Speaker 3: straight away or hold your hand to get it fixed.
28:39
Speaker 3: But if the error is on the side of the
28:41
Speaker 3: credit provider, they might have just wrongly reported the information.
28:45
Speaker 3: Like I've heard stories where someone's had a zero added
28:49
Speaker 3: to the end of a loan before, which would have
28:52
Speaker 3: been terrifying to see. But it was an easy fix.
28:55
Speaker 3: We got it fixed up really quickly because it was incorrect,
28:58
Speaker 3: and they just went back validated informa said yep, that
29:00
Speaker 3: was wrong. The reporting was incorrect. Very scary, but really
29:04
Speaker 3: important to stay on top of it. And if a
29:07
Speaker 3: credit provider has reported information wrongly, they actually will be
29:11
Speaker 3: able to fix it. So to fix this, you can
29:14
Speaker 3: contact your credit provider and be like, hey, there's some
29:17
Speaker 3: wrong stuff or my credit report could you please have
29:20
Speaker 3: this removed or updated? And if the credit provider agrees
29:24
Speaker 3: that it's wrong, they'll then talk to the credit reporting
29:26
Speaker 3: agency to remove it from your credit report and fix
29:29
Speaker 3: your credit score to make sure that it is appropriate
29:32
Speaker 3: and reflective of your actual credit history. And if you
29:36
Speaker 3: can't reach an agreement, like if you're talking to your
29:39
Speaker 3: credit provider and they're like, no, that's wrong, you definitely
29:42
Speaker 3: had that, I would reach out to the AFCA, which
29:46
Speaker 3: is the Australian Financial Complaints Authority and make a complaint
29:50
Speaker 3: which is free and you will get an independent dispute
29:53
Speaker 3: resolution through that process. And on top of that, to
29:57
Speaker 3: add to this again, I'm sorry if you are strug
30:00
Speaker 3: to get something fixed, or you don't fully understand it
30:02
Speaker 3: or it's super overwhelming. Our friends at the National Debt
30:04
Speaker 3: Helpline are absolute legends and will be on top of
30:07
Speaker 3: that for you. Amazing.
30:09
Speaker 2: So moral of the story like, don't stress, You'll get
30:12
Speaker 2: it sorted one way or another.
30:14
Speaker 3: Yeah, don't stress, get it sorted, but also be on
30:16
Speaker 3: top of it really early, Like I know if you're
30:18
Speaker 3: in your early twenties, you're like Victoria, I have no
30:22
Speaker 3: inkling to talk about my credit history. I get it,
30:25
Speaker 3: but get in the process of understanding these things. It's
30:29
Speaker 3: not necessarily you having to do it right here in now.
30:33
Speaker 3: It's knowing that you have access to these things and
30:35
Speaker 3: knowing to check that because I promise you, it is
30:38
Speaker 3: one of the most disheartening things to find that your
30:41
Speaker 3: credit score is letting you down. If you've just gone
30:44
Speaker 3: through the process of saving your first fifty thousand dollars
30:46
Speaker 3: for your home deposit and you can't wait and you're
30:49
Speaker 3: you know, you've found this house, and you're going to
30:51
Speaker 3: a broker and you're like, broker, please help me. I've
30:53
Speaker 3: got to organize X, Y and Z, and they go, hey, cool,
30:56
Speaker 3: Like your credit report came back and it's cooked and
31:00
Speaker 3: no one's going to lend to you because of this.
31:01
Speaker 3: And you go, what, I've never had any type of
31:04
Speaker 3: credit and you find out that it maybe wasn't you.
31:07
Speaker 3: So I'm not saying that this is super common, but
31:09
Speaker 3: as you guys know, on Money Darries a week or
31:12
Speaker 3: so ago, we did have an episode where someone's identity
31:16
Speaker 3: was stolen, and thankfully she was on top of it
31:18
Speaker 3: because she knew her identity had been stolen because her
31:21
Speaker 3: handbag was stolen from the car. But sometimes, especially in
31:25
Speaker 3: online environments, you don't even know that your identity has
31:28
Speaker 3: been borrowed or stolen, so you need to be super
31:31
Speaker 3: on top of it. And this is just one of
31:33
Speaker 3: those ways to make sure that you are safe and secure.
31:35
Speaker 3: Brilliant V.
31:36
Speaker 2: I think that is the perfect place to leave today's show.
31:40
Speaker 2: But I guess to wrap in terms of improving our
31:42
Speaker 2: credit score, we had sort out your budget. Stop before
31:46
Speaker 2: applying for more credit. Take pause, really think about it,
31:49
Speaker 2: seek help and guidance if you need it, lower your
31:52
Speaker 2: credit limits, and pay your bills on time. And of
31:56
Speaker 2: course I feel like this was a really clear message
31:58
Speaker 2: in today's episode of those dodgy companies who say they'll
32:02
Speaker 2: improve your credit score in just a few days.
32:05
Speaker 3: It's not a thing. Not a thing. Oh my gosh,
32:08
Speaker 3: g g. Today's last episode of the year, or the
32:11
Speaker 3: last Wednesday episode of the year. See you later, my
32:14
Speaker 3: angel friends. Thanks for hanging around, see you in twenty
32:18
Speaker 3: twenty two. We love you, oh my gosh. Have the
32:21
Speaker 3: best break or holiday or you know, time working, whatever
32:25
Speaker 3: it is. Enjoy the festive season, but we'll see you
32:28
Speaker 3: next year. And as always, just before we head off,
32:31
Speaker 3: we'd like to acknowledge and pay respect to Australia's Aboriginal
32:35
Speaker 3: and Torres Strait Islander people's. They're the traditional custodians of
32:38
Speaker 3: the lands, the waterways and the skies all across Australia.
32:42
Speaker 3: We thank you for sharing and for caring for the
32:44
Speaker 3: land on which we are able to learn. We pay
32:46
Speaker 3: respect to order's passed and present, and we share our
32:49
Speaker 3: friendship and our kindness.
32:51
Speaker 2: And remember everyone that the advice shared on She's on
32:54
Speaker 2: the Money is general in nature and does not consider
32:57
Speaker 2: your individual circumstances. The money exists purely for educational purposes
33:02
Speaker 2: and should not be relied upon to make an investment
33:05
Speaker 2: or a financial decision.
33:07
Speaker 3: And we promise.
33:08
Speaker 2: Victoria Divine is an authorized representative of Australia Pacific Funds
33:12
Speaker 2: Management Proprietary Limited a BN three four one three two
33:16
Speaker 2: four six three two five seven AFSL three three nine
33:19
Speaker 2: one five one.
33:20
Speaker 3: See you next year. You guys, we had the same joke.
33:25
Speaker 2: Bye bye, guys,