What Goes into your Credit Score?

Updated: Feb 2

Your credit score is a great thing to know if you’re looking to take out a line of credit in the future. Remember, not all debt is bad, and if you want to become a homeowner, it’s best you understand exactly how credit scores work and how lenders view you.


Having a good credit score can be useful for a number of reasons, not just to secure a mortgage. The higher your score, the less interest you’re likely to pay on credit cards, loans and other types of finance.


Some estate agents and landlords also use your credit score to view if you’ll be a good renter, so it’s important to look after your score, before and after you’re wanting to buy a home.


Why not check out: How To Boost Your Credit Score


Payment History - if you’ve ever missed any payments this is going to be a large contributing factor to a lower score


Debt Owed - the more debt owed, the harder it becomes to pay it off, which is why it can be viewed negatively. This is also known as utilisation, it’s best to keep your total credit utilisation below 35% of your total limit.


Length of Debt - how long have you had this debt? Now, surprisingly, the longer you’ve had a line of credit, the better you’re viewed by lenders. If you decide to pay off an old credit card, DON’T close it!


New Debt - ever notice the moment you apply for a new store card or credit card your score dips suddenly? But it can take six months for a debt payment to show up? Weird but that’s how it is.


Types of Debt - how many different types of debt do you have? Car finance, credit cards, mortgage? That’s a lot of lending!


If buying property isn’t your goal in life (not just your first home but future investment properties) it’s still another good way of protecting yourself against the unexpected. We all hope that once we manage our finances we won’t need loans, credit or to put things on finance but we can’t be sure those things won’t happen, by maintaining a good credit score, it means that if you did get into those situations in the future, you’ll be saving money by having a better interest rate as lenders see you as trustworthy with their money and offer better rates.


Do you know your credit score?




The Financial Workbook goes into more depth and there’s a fancy lil tracker for you to keep an eye on your score. Click here to find out more.

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