Queensland’s best and worst places for dealing with debt

Getting a loan can be harder and more expensive for people with low credit scores. Here’s where Queenslanders struggle the most.

Check your credit score online for free before applying for a loan.

Queensland households battling debt issues are facing further financial pressures as poor credit histories prevent them from getting ahead.

As refinancing reaches record highs across Australia, lenders are focusing more on people’s credit scores when approving loans and setting interest rates, with the wealthiest suburbs and towns the biggest winners.

An analysis of 500,000 scores by financial technology company ClearScore has found Gold Coast Hinterland has the highest average credit score among the state’s 241 statistical areas, coming in at 735 – well above average.

Second is Sherwood-Indooroopilly at 715, followed by Coolangatta (708) and Brisbane Inner West (707).

A credit score higher than 700 is considered very good, while scores under 625 are below average. People can check their score online for free.

Queensland’s worst areas for credit scores are Springwood-Kingston (624), Far North (629), Outback-North (629) and Springfield-Redbank (637).

ClearScore chief international officer Stephen Smyth said bad scores were often caused by negative shocks such as divorce, unemployment or health costs.

“When this happens, people might struggle to pay back debts, or even default on loans and this creates a poor credit score,” he said.

“This can happen to wealthy people as well, but it is more likely to happen to people in poorer neighbourhoods as people have much less financial cushion to overcome setbacks.”

Mr Smyth said credit scores were increasingly used amid the rise of fintech lenders that tapped data to make quick decisions.

“Some lenders do not lend at all to people with poor credit histories – and it also can make borrowing more expensive as some lenders charge people who have managed their credit well a lower interest rate,” he said.

RateCity research director Sally Tindall says several factors impact loans. Picture: Supplied

Beyond Bank national operations manager Sophie Scott-Young said people from wealthier areas often had access to advice and support, greater cash flow and financial education.

“People in regional and low socio-economic areas often have lower incomes, which makes meeting payment deadlines difficult,” she said.

Ms Scott-Young said many people might not be aware of available support, but should reach out to their lender or get budgeting help from their bank.

“Simple things like making sure you pay bills on time, make loan repayments on time, and not miss them will assist in lifting your credit score over time,” she said.

RateCity research director Sally Tindall said some banks used software that checked credit scores to speed up applications, but in some cases this could lead to automatic rejection of a loan.

“Before you apply for a loan, spend five minutes checking your credit score and your credit file to make sure everything is in order,” she said.

“Factors such as a person’s income, expenses, savings and existing debts are more crucial in determining whether the bank will approve a person’s loan and how much they’ll lend you.”

Finder personal finance specialist Taylor Blackburn said low credit scores could keep people from getting mortgages, car loans, credit cards or mobile phone plans.

“A bad score isn’t a death sentence – if your score is low, identify why and work to improve your history,” he said.