Most individuals and businesses are dependent on various kinds of loans, such as home loans, car loans, and working capital loans. The sanctioning and the interest rates depend on the credit rating of an individual or business unit.

Overview
Credit rating Australia is monitored and calculated by Veda Advantage agency. The score is based on the credit worthiness of an individual or business. Various factors are considered and provided an individual weight to determine the credit score. These scores are considered by lenders while sanctioning loans to borrowers.

Factors
Numerous factors are considered by the credit rating Australia agency to calculate the credit score of individuals and businesses. These include:
• A history of overdue payments or missed payments of debt obligations when due, if any.
• If an individual has misused a credit facility available, it results in a dip in the credit score.
• The duration of the credit history also determines the credit score. A longer history improves the rating and vice versa.
• For individuals who have availed of too much credit in the short term, these individuals are deemed riskier by lenders.
• Credit score also depends on the type of credit taken. A credit card is riskier than a one-time debt obligation.

Applications
Credit scores provide lending institutions an insight on the credit worthiness of a borrower. However, different lenders utilize different factors while considering the credit worthiness of individuals.
• Mortgage lenders assess the individual’s long-term repayment capacity while sanctioning the loans.
• Credit card companies analyze an individual’s short-term payment capability and customer loyalty while providing credit card sanctioning limits.
Although different types of lenders consider different factors, the primary application of credit scores is to determine the credit worthiness of borrowers. Besides being used by lenders, credit scores are also important to individuals. A borrower should know his/her score to be able to negotiate a better loan sanction.
Improve credit score

Individuals can increase their credit scores in numerous ways.
• Maintain a savings account even if huge amounts are not saved.
• Maintain a 50% balance on the credit card limit.
• Individuals should refrain from using multiple credit cards.
• Regularly verify that there are no anomalies in the credit score rating card. If errors are found, these should be rectified immediately.
• Lastly, one should not avail huge debt obligations. Do not be liberal with credit card usage unless individuals are sure to pay off the bills within the due date.

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