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8 August 2022 | By Lending People

Understanding Your Personal Credit Score

When it comes to financial matters, your credit score plays a pivotal role in determining your access to loans, credit cards, and even some utility services. But how does credit scoring actually work?

Navigating the World of Credit Scoring

Your credit score is essentially a reflection of your financial history, focusing on how reliably you've managed credit in the past. It's crafted from the data in your credit file, incorporating elements like:

  • Length of Credit History: The duration you've been managing credit accounts.
  • Payment History: Your consistency in making timely payments, including any late ones.
  • Amount Owed: The sizes of the credits you've handled.
  • Types of Credit: The nature of your credit lines, including whether they're secured or unsecured, and any utilities accounts.
  • Credit Inquiries: How recently and frequently you've applied for new credit.
  • Negative Marks: Any defaults, judgments, or insolvency records, including their recency and amounts owed.

Credit scores aren't just arbitrary numbers; they're a crucial part of the approval process for banks, finance companies, and utility providers. They help these institutions gauge the risk of lending to you, ensuring a fair and consistent approach to all applications. This means a better chance of approval for you, as your potential lender has a clearer understanding of the risk involved.

What Your Score Means for You

Centrix categorizes consumer scores from 0 (very high risk) to 1,000 (very low risk), dividing the spectrum into five risk bands:

  • Excellent (>892): Likely eligible for top-tier credit cards, loans, and services.
  • Very Good (825 – 892): Good prospects for most financial products.
  • Average (706 – 824): Standard offers should be accessible.
  • Fair (496 – 705): Possible access to credit, potentially with conditions, or higher interest rates.
  • Poor (<496): Unlikely to qualify.

Understanding these categories can guide you in knowing where you stand and what financial products you might be eligible for. Remember, a strong credit score opens doors to better financial opportunities, so managing your credit wisely is key to maintaining financial health.

Whether you're eyeing a new loan or just curious about your financial standing, knowing your credit score and how it's calculated is the first step towards making informed financial decisions. So, take the time to review your credit history and work towards optimizing your score. Your financial future will thank you for it!

Sample Credit Report


This blog is provided for general information purposes and is not a recommendation you enter into or exit any particular loans or insurance policy. Information on the website does not consider your particular circumstances, including your objectives, financial situation or needs. We recommend you seek advice from a financial adviser before taking any action as appropriate. The Lending People Limited (FSP240365) is a licensed financial advice provider and can provide advice on some types of personal loans. Find out more about The Lending People and how we may be able to help you.

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¹All approvals are subject to responsible lending inquiries. If you sign your loan contracts before 3:00 pm on a weekday, you will receive the funds on the same day. While bank processing times differ, funds usually show up in your account by early evening.

²Annual Interest Rate (AIR) and Annual Percentage Rate (APR): Unsecured interest rates range from 13.90% p.a. to 23.90% p.a.

³Minimum and Maximum Repayment Terms: Repayment terms range from 1 year to 5 years.

⁴Fees: Where Lending People is the creditor, we charge a $174 establishment fee. For a limited time, until 31st March 2024, this establishment fee is waived. Lending People does not charge a monthly fee or early repayment fee. Where another provider is the creditor, provider-specific establishment fees, monthly fees, and early repayment fees may apply.

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Representative Example of the Total Cost of a Loan: If you borrow $10,000 over a repayment term of 36 months at an AIR of 14.95% p.a., your total repayments will be $12,631.60 (made up of $10,000 principal, a $174 establishment fee, and interest charges of $2,457.60). This example is based on amortised scheduled weekly repayments with a fixed interest rate for the term of the loan.

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