Why women are better at juggling finances
Women are better money managers than men - allowing them to qualify for cheaper home loans and credit cards - but have less confidence in their abilities to organise their finances, it has been revealed.
Credit Simple's annual State of the Nation Report, which used the data of 25 million Australians, shows that women have higher credit ratings in almost every city and region in Australia.
However, despite the fact that they are better at juggling their finances, many women are severely lacking financial confidence.
The report found men are more confident with their money (32 per cent compared to 23 per cent of women) and more of them feel they are good budgeters (32 per cent vs 23 per cent).
Credit Simple CEO David Scognamiglio told News Corp Australia men were likely to be more confident as traditionally many have defined their success by their financial status.
Men, typically, are less skilled when it comes to managing their finances and can be prone to "peacocking" - splashing the cash to impress others and living beyond their means.
On the other hand, women tend to be more financially responsible and are less likely to default on payments.
But on the downside, women are less inclined to take financial risks, such as high-risk returns on their superannuation.
Women, he said, should have more confidence when it comes to managing finances because "they're doing a better job".
"At the end of the day, your credit score costs you money. On average, Australian women have a score of 796, compared to only 778 for men.
"That is why in many cases, women should be able to demand a better deal on home loans, credit cards, insurance policies and electricity prices than men."
Lower credit scores can affect your ability to get cheaper home and car loans, with banks now moving towards risk-based pricing, where interest rates are based on a person's credit score.
The Credit Simple analysis found large gaps between perceptions and reality in how Australians money.
A whopping 65 per cent of Australians don't know their credit scores and, of those who do, only 11 per cent check it weekly.
Mr Scognamiglio told News Corp Australia consumers needed to be proactive.
"The good thing about knowing your credit score is that you can actively work to improve it," he said.
"Paying your accounts on time might seem obvious, but it's important to note that when you
default on a payment that black mark stays on your record for five years.
"We also advise people to minimise your applications for credit. Applying for too many loans,
including credit cards, doesn't look good."
TOP FIVE TIPS TO IMPROVE YOUR CREDIT SCORE
1. Make sure you pay your bills on time
Changes to the system mean both your good behaviour, as well as your bad is recorded.
2. Collect birthdays
Young people will usually have a lower credit score than older people.
3. Minimise your applications for credit
Shopping around for a new credit card or home loan can save you money. But applying for too many of them can actually lower your credit rating.
4. If you've defaulted, pay up
The default will stay on your file for five years regardless of whether or not you pay it, but if
you pay it off, it will reduce the negative impact.
It's nice to have champagne taste on a beer budget, but live within your means while you work on your credit score.
To check your credit score, free of charge, go to Credit Simple.