Understanding credit health: reports and scores

Everyone has goals. And in today's financial landscape, your credit health often plays a vital role in achieving them. But what exactly is credit health, and why should you care about it?

Think of credit health as a reflection of your borrowing habits and how likely you are to be approved for credit applications – it's more than just a number or a rating. It encompasses your entire financial behaviour with credit, from how you manage your credit cards to how reliable you are with bill payments.

Improving and maintaining your credit health requires ongoing attention and care.

How credit health can affect your financial goals

Your credit health could influence virtually every major financial decision in your life where credit is involved. When you're buying your first home, it could be the difference between securing a competitive mortgage rate and facing higher interest charges that may cost you considerably more over the life of your loan.

Planning to start a business? Lenders look closely at your credit report – and, in turn, your credit health – when deciding whether to approve that crucial loan. Even comparatively smaller goals, like financing a new car or getting approved for a rewards credit card, depend heavily on the information found on your credit report.

But it’s not just about borrowing money. Employers may check your report during job applications, especially for financial roles. Landlords often review it before offering a tenancy agreement, and some insurance companies consider it when calculating your premiums.

What is a credit score?

Your credit score is a representation of your credit health and how likely you are to be accepted for a new credit application. The higher the number, the more likely you’ll be given the green light.

But keep in mind – your score will likely differ with each credit reference agency: Experian, Equifax, and TransUnion. That’s because they use their own score range, rate things uniquely, and might hold different information on you. 

Your Checkmyfile credit score is a reflection of your information from all three agencies. Get the complete picture of where you stand with a free 30-day trial. It’s then a paid monthly subscription – cancel online anytime. 

Building and maintaining good credit health 

The good news is that there are steps you can take to help improve your credit health, no matter your credit score. Here are some key factors: 

• Your payment history shows whether you consistently pay bills on time. This includes everything from credit card payments to mobile phone contracts and some utility bills. Even a single missed payment can cause your credit score to drop, but establishing a pattern of reliable repayments helps build a positive profile over time. 

• Your credit utilisation – how much of your available credit you're using – also matters. Keeping your credit card balances low relative to your credit limits demonstrates responsible borrowing behaviour and can have a positive influence. 

• The length of your credit history is important. A longer track record of managing credit responsibly helps lenders better assess your reliability as a borrower. Keep in mind that information stays on your credit report for six years. 

Why you should monitor your credit report

Keeping a close eye on your credit health isn’t just about knowing your credit score. Regular report checks can help you: 

• Spot potential identity theft early by identifying suspicious applications or accounts you don't recognise. The sooner you detect fraudulent activity, the easier it could be to address – depending on how many fraudulent applications there are. 

• Identify and correct errors that might be negatively affecting your credit score. Whether it's an incorrectly reported missed payment or an account that doesn't belong to you, regular checks help make sure your information is being accurately reported.  

• Track your progress as you work to improve your credit health. Seeing positive changes on your report can provide motivation to maintain good financial habits. 

Take control of your financial future

Your credit health isn't set in stone. It’s dynamic and responds to your credit behaviours. Regularly monitoring your report and understanding what influences your score will better equip you to make informed decisions about your finances. 

Remember that no matter what your credit score is right now, there are always actionable steps you can take – and habits you can learn – to get things moving in the right direction over time.  

Take the first step by checking your most detailed credit report. Sign up to Checkmyfile with a 30-day free trial. It’s then a paid monthly subscription – cancel online anytime.