Research1 released today from CreditSimple.com.au reveals that Australians don’t know they can get better deals from banks, energy providers and telcos, and could collectively be missing out on up to $8.3 billion2 annually as a result.
According to the survey2, consumers didn’t understand they could bargain for better deals across a range of areas, including:
→ Getting a better deal on a loan (53 per cent)
→ Negotiating electricity bill rates (52 per cent)
→ Improving credit card rates (50 per cent)
→ Getting better home internet packages (47 per cent)
This news comes as CreditSimple.com.au, a new independent consumer advocate pledging to help get Australians the deals they deserve, launches today. By getting free access to their credit scores through CreditSimple.com.au Aussies can access their credit information and understand if they are eligible for better deals from banks, energy companies, and telecommunications providers.
The research also shows Aussies aren’t sure how to improve their score, with more than half (52 per cent) saying they wouldn’t know what to do, and just 21 per cent say they have a handle on how to bring their score up.
This lack of understanding means Aussies could be missing out on significant savings each year. CreditSimple.com.au internal data shows that the average amount of money saved through negotiating deals is $864 per person over the course of a year. This equates to a whopping $8.3 billion in potential savings that more Australians could be taking advantage of.
CreditSimple.com.au CEO David Scognamiglio said CreditSimple.com.au has launched to help Aussies improve their credit scores, understand what people are eligible for and help people use their score to get a better deal.
“Our research shows 85 per cent of people reckon that they should be able to get a better deal with a good credit score, but not everyone realises they actually can.
“Our mission is to help people feel empowered to own their credit information and use it to their advantage.”
Leveraging your credit score to obtain better deals doesn’t have to be difficult or awkward, says Daniel Foggo, CEO of RateSetter Australia, one of the many CreditSimple.com.au partners.
“We’ve teamed up with CreditSimple.com.au to help give consumers a better deal,”
Mr Foggo said. “When it comes to obtaining finance, the first step for the consumer is to find out what their credit score is. If it’s above average, they shouldn’t accept the headline rates on offer from banks. They should either negotiate a better deal with their bank, or find an alternative lender that really rewards their good credit history with better rates.”
David Scognamiglio said CreditSimple.com.au is about making sure everyone gets the best deal for them.
“We want to give all Australians access to great deals that may otherwise only be available to what we call credit unicorns - those with extremely high scores. Whether it be a lower rate on a personal loan or a great credit card deal, we want to make unicorn-style deals accessible to everyone in Australia, whatever their score.
“There are plenty of simple steps Aussies can take to improve their credit scores. We’ve categorised scores into profiles that help Aussies see what they can do to get to the next level,” Mr Scognamiglio said.
CreditSimple.com.au credit profiles
Score of 1000 - Unicorn
3.5 per cent of Aussies
A credit unicorn has a perfect relationship with their credit score and is the most desirable customer out there. Those in this zone are often older people with a long history of borrowing and near perfect repayments. Banks should be rolling out a red carpet for unicorns and these customers should have the pick of the best deals around.
“Unicorns are in a fantastic position,” Mr Scognamiglio said. “The trick is maintaining this title as just one overdue bill could push them into a lower category. Unicorns need to watch their credit score closely and ensure they continue to pay bills and loans on time. A unicorn usually has a mortgage and been paying that off without issue. As housing affordability decreases, it’s going to be hard for younger people to join this bracket.”
Score of 800-999 - Superb
22 per cent of Aussies
A decent chunk of Aussies sit in this category. People in this band are well above average, they’re paying all their bills in full and on time, and they’ve got a track record of paying off debt responsibly over time. They also probably have a mortgage.
“Although Aussies in this category are not technically credit unicorns, they are so close that they should consider themselves in the zone above. People with credit scores this high are few and far between, and should be leading regular conversations with banks, telco and energy providers to ensure they are being offered deals that match their score.”
Score of 700-799 - Great
41 per cent of Aussies
People in this range are in a good place with their credit scores. They’ve been paying their bills on time for many years and probably have a mortgage. They’re most likely homeowners with a long history of credit, who have proven to be reliable bets over time. They’re in a strong position to negotiate better deals with banks, telcos and energy providers.
“They've got a great score, but probably haven't been using it to its full advantage. If this is you, you're an attractive customer to banks and telcos and energy providers, so feel empowered to talk to them about great deals that are available.”
Score of 500-699- Average
23 per cent of Aussies
This person probably pays their bills on time, but may have a number of credit enquiries or applications for loans against their name. Someone can also fall into this category because they’re fairly new to credit and don’t have a lot of information on their file. This person is most likely a young professional who is responsible with money, but looking for a first-time mortgage or loan.
“Look around before applying for credit and do your homework. If someone has made a large number of enquiries in a short timeframe, they will look less attractive to credit providers.”
Score of 300-499 - Room to improve
3 per cent of Aussies
People in this range might regularly pay bills a little late or make a large number of loan requests that don't get approved. A score might temporarily be in this region because of a recent credit default, but should be on its way up if it’s been successfully paid off. This person is likely to be a younger person who has recently moved out of home and is in the process of organising their finances.
“Check your credit report closely to make sure that there are no surprises on there. Often unexpected black marks can be a result of something simple like failing to immediately change your address when you move house and missing bills that need to be paid.”
Score of 0-299 - Below average
7.5 per cent of Aussies
People in this range are likely to have some form of derogatory information on their files, such as unpaid defaults or a bankruptcy. Sometimes people with no debt or bankruptcy still make it into this category, for example those who pay bills as late as possible without defaulting.
“People in this group should start by ensuring that all loans and bills are paid on time. They may also want to consider talking to an adviser who can show ways to consolidate existing debts to help make repayments easier.”
CreditSimple.com.au also offers tools to help people monitor their credit information, check how they rank amongst their community, and advice on improving their score and their personal finances.