2.3m Australians at risk of financial trouble in the next year: Equifax Australian Credit Scorecard offers first Equifax Score analysis
Sydney, Australia, 30 September 2013: More than 2.3 million Australians are at risk of financial strife in the next yeari, with 27% (628,000) at high risk of credit default from something as simple as an unpaid bill, credit card or loan, according to analysis of credit scores, or Equifax Scores, by credit bureau Veda.
Available to consumers for the first time, the Equifax Score is a number between 0 and 1,200 that summarises information on your Veda credit file at a specific point in time. The higher the Equifax Score, the better an individual’s credit worthiness.
Click here to download the Veda Australian Credit Scorecard (October 2013)
Belinda Diprose, Veda Marketing Manager, says making the Equifax Score available to consumers for the first time makes it easier for Australians to understand and manage their credit profile. This is particularly important for the 15% of credit active Australians (2.3 million) at risk of default in the next year, she says.
While the national average Equifax Score is 749 (from a range of 0 to 1,200), there are pockets of extreme risk. QLD, NT and NSW fall below the national average, being home to the lowest average Equifax Scores and having proportionally more high-risk residents. The lowest average Equifax Scores are found in cities rather than in rural areas.
Gen Ys lead the pack for credit default risk (23%), over Gen Xers (16%) and Baby Boomers (8%); which is concerning when Gen Ys are those most likely to seek credit in the future for a home, car or big household purchases.
“Many people don’t know what’s on their credit report or that utility and telco applications or defaults may be recorded on their credit file. Lenders like banks, telcos and utilities may use a person’s credit history and Equifax Score when assessing credit applications,” she said.
“Certain types of information, like a credit default, can stay on a person’s credit report for up to five years. So even if you’ve got no plans to apply for credit right now, it pays to be aware of your Equifax Score so you know where you stand on your credit report held by Veda. This may make all the difference in future when applying for credit for a car, a wedding, a mortgage, or for purchases like furniture or a holiday,” Ms Diprose said.
Veda is the only credit bureau in Australia to offer consumers this credit ranking tool, designed to give Australians more power to improve and manage their credit profile. The Equifax Score represents all elements of a person’s credit file.
“If you find out what’s recorded on your credit report, you can check whether it’s accurate and you’ll better understand where you stand if you want to apply for credit. If you have a low Equifax Score then you can take steps to try and improve your score. For example, paying off any defaults may be viewed positively by lenders.”
Veda has also combined its analysis of 300,000 Equifax Scores with consumer research of 1,000 Australiansii to form the first Veda Australian Credit Scorecardiii, which will offer market leading insights into credit habits and Equifax Scores year on year.
Ms Diprose says the inaugural Veda Australian Credit Scorecard shows that despite 15% of Australians being at risk of a credit default being recorded on their credit report in the next 12 months, considerable lack of awareness exists about what a credit history is, or how a poor credit report can impact chances of getting credit from lenders.
“The Veda Australian Credit Scorecard found that about 80% of people have never accessed their credit report, almost half (47%) of people think overdue community bills, such as library and video store bills are recorded, and over a quarter of people (26%) of people think speeding tickets are recorded on their credit report,” Ms Diprose said.
“Alarmingly almost a third of consumers don’t realise that all credit applications are recorded as part of their credit history – even if they are not successful or don’t accept the loan offers. Having a number of applications can signal financial stress and may lead to a credit provider declining your credit application.”
To find out how you score or for more information, go to www.veda.com.au
Click here to download the Veda Australian Credit Scorecard (October 2013)
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i Analysis based on ABS population figures of 15,443,150 credit active Australians as at July 2013. Of this population, 15% (or 2.3 million Australians) are at risk of credit default or other adverse credit event being recorded on their Veda credit report in the next 12 months. 628,000 (or 27%) of the 2.3 million are considered at high to extreme risk of credit default in the next 12 months, having up to a 30% chance of incurring a default in that time. Generation X and Generation Y make up 86% of the high to extreme risk category.
ii Quantitative consumer survey conducted by The Leading Edge in July 2013 using an online panel, on behalf of Veda. It was a representative survey sample (n = 1000) across all Australian states and territories.
iii The inaugural Veda Australian Credit Scorecard combines consumer research of 1,000 Australians about their finances with Veda’s analysis of 300,000 Equifax Scores.