Your credit score is a number that represents how risky you are as a borrower, based on your credit history. In Australia, three credit bureaus (Equifax, Illion, and Experian) each maintain a file on you and calculate their own score. Lenders use these scores, along with other information, to decide whether to approve your loan or credit application and at what rate.
What Your Score Actually Measures
Your credit score is a statistical prediction of how likely you are to default on a credit obligation within the next 12 months. A higher score means lower predicted risk.
It is not a moral judgment. It does not measure your wealth, income, or financial responsibility in any holistic sense. Someone earning $300,000 per year with missed payments will have a worse score than someone earning $50,000 with a clean credit history.
Score Bands by Bureau
Each bureau uses a different scoring range:
Equifax (0 - 1,200)
| Score Range | Rating |
|---|---|
| 853 - 1,200 | Excellent |
| 735 - 852 | Very Good |
| 661 - 734 | Good |
| 460 - 660 | Average |
| 0 - 459 | Below Average |
Illion (0 - 1,000)
| Score Range | Rating |
|---|---|
| 800 - 1,000 | Excellent |
| 700 - 799 | Very Good |
| 500 - 699 | Good |
| 300 - 499 | Fair |
| 0 - 299 | Below Average |
Experian (0 - 1,000)
| Score Range | Rating |
|---|---|
| 800 - 1,000 | Excellent |
| 700 - 799 | Very Good |
| 625 - 699 | Good |
| 550 - 624 | Fair |
| 0 - 549 | Below Average |
What Affects Your Score
Positive Factors
- On-time repayments - consistently paying bills and loans on time
- Length of credit history - longer histories are better
- Diverse credit mix - having different types of credit (mortgage, credit card) managed well
- Positive repayment history - under comprehensive reporting, your payment history is now recorded
Negative Factors (in order of impact)
- Defaults - formal listings for debts overdue by 60+ days and over $150
- Court judgments - CCJs for unpaid debts
- Bankruptcy/debt agreements - the most severe negative events
- Late payments - recorded under comprehensive reporting
- Multiple credit applications - too many hard enquiries in a short period suggests desperation for credit
- High credit utilisation - using a large percentage of your available credit limit
What Does NOT Affect Your Score
- Your income or employment status
- Your savings or investment balances
- Where you live (though your address history is recorded)
- Your age, gender, or ethnicity
- Checking your own score (soft enquiry)
How to Check Your Score
You're entitled to a free credit report from each bureau once every 3 months:
- Equifax: equifax.com.au - request online
- Illion: illion.com.au - request online
- Experian: experian.com.au - request online
Tip: Check all three. Different lenders use different bureaus, and your score may vary between them because each holds slightly different data.
How to Improve Your Score
Quick Wins (1-3 months)
- Fix errors. Check your report for incorrect listings. If you find errors, dispute them directly with the bureau. This is free and can sometimes produce a significant score improvement.
- Reduce credit card limits. High available credit (even unused) can count against you. Call your bank and lower your limits to what you actually need.
- Stop applying for credit. Each application creates a hard enquiry. Pause all applications for at least 3-6 months.
Medium-Term Actions (3-12 months)
- Set up automatic payments. Never miss a due date. Even one late payment is now recorded under comprehensive reporting.
- Pay down balances. Reduce credit card utilisation to below 30% of your limit.
- Keep old accounts open. Length of credit history matters. Don't close your oldest credit card unless it has an annual fee you can't justify.
Long-Term Strategies (12+ months)
- Build a positive payment history. Comprehensive reporting means your good behaviour is now recorded, not just the bad. Consistent on-time payments steadily improve your score.
- Wait for negative items to expire. Defaults drop off after 5 years. Late payments also age off the report over time.
- Maintain a diverse credit profile. Having a managed mix of credit types (e.g., a credit card paid in full monthly and a well-serviced car loan) demonstrates responsible credit management.
How Lenders Actually Use Your Score
Your credit score is one factor in a lender's assessment, not the only one. Lenders also consider:
- Your income and expenses (serviceability)
- Your employment stability
- Your deposit size (for home loans)
- Your existing debts
- The type of product you're applying for
A high credit score won't guarantee approval if your income doesn't support the loan. A slightly below-average score won't necessarily disqualify you if everything else is strong. However, a poor score can result in higher interest rates or outright rejection.
Your Next Move
Your credit score is important but not mysterious. Check it for free at all three bureaus, fix any errors, reduce unnecessary credit limits, and build a consistent record of on-time payments. If you're planning a major loan application (home loan, car loan), check your score at least 3-6 months before applying so you have time to address any issues.
Related Guides
- Best Savings Accounts - find the right account once your finances are in order
- Government Deposit Guarantee - how your deposits are protected
Frequently Asked Questions
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