Amanda Smith
Georgia Rose
Athena Cocoves
It’s best practice to check your credit score at least once a year. Knowing your score can give you a better understanding of your borrowing power. For example, a low score may lead to higher interest rates or denied applications, while a good credit score can open the door to more credit and better deals.
» MORE: What is credit and why do you need it?
What is a credit score?
A credit score is a number that summarises the credit-related activities in your credit report. In Australia, there are three main credit reporting agencies: Equifax, Experian, and illion.
Credit scores in Australia fall between 0 and 1,000 or 0 and 1,200, depending on the reporting body.
The higher the score, the stronger your borrowing capacity. The lower the score, the riskier you appear to lenders, which can make borrowing money more challenging.
What is a good credit score in Australia?
Credit scores fall into ranges or ‘bands’. These bands are often referred to as credit ratings and given names such as average, good, very good and excellent.
A good credit score is generally 625 or higher, depending on the agency.
The credit score ranges and ratings used by each of Australia’s three main agencies are:
| Equifax | Experian | illion | |
|---|---|---|---|
| Below Average or Low Score | 0-459 | 0-549 | 1-299 |
| Average, Fair or Room for Improvement | 460-660 | 550-624 | 300-499 |
| Good | 661-734 | 625-699 | 500-699 |
| Very Good or Great | 735-852 | 700-799 | 700-799 |
| Excellent | 853-1200 | 800-1000 | 800-1000 |
Each agency uses slightly different language to describe these ratings.
- Equifax (scores 0-1,200): Below average, average, good, very good, and excellent.
- Experian (scores 0-1,000): Below average, fair, good, very good, and excellent.
- illion (scores 0-1,000): Low score, room for improvement, good, great, and excellent.
What a good credit score means to lenders
A good credit score tells lenders you can use credit responsibly. Perhaps you have a credit card that you pay off on time, or are never late on your mortgage payments, for example. Because you’ve proven you can pay back the credit you borrow, banks and providers are more likely to offer you more products with better offers and lower fees.
In short, a good credit score gives you buying power as a consumer, especially with the big life purchases that have the most impact on your finances.
What is the average credit score in Australia?
The average Australian credit score was 855 in 2023, according to the Equifax Australian Credit Scorecard. But when you look at the average scores by age, you can get a better idea of where you sit on the spectrum.
Average credit scores by age in Australia
| Age group | Average Equifax credit score |
|---|---|
| 18 to 30 | 731 |
| 31 to 40 | 829 |
| 41 to 50 | 868 |
| 51 to 60 | 918 |
| 61 to 70 | 934 |
Did you know? Credit scores tend to trend upwards with age. Statistically, this makes sense, as younger people have a shorter credit history and are less likely to have mortgages. Both lengths of credit and a track record of repayments can improve credit scores.
How are credit scores determined?
Each credit agency uses a slightly different formula to calculate credit scores and does not share the full details of the algorithms. This variation means your credit score may differ from one agency to the next, and you may not know why one is higher than another.
However, the data in your credit report always determines your credit score. It includes information such as the amount of money you’ve borrowed, the number and frequency of credit applications you’ve submitted, and whether you pay your bills on time.
What affects your credit score?
Each credit reporting agency has slightly different scoring methods. For example, credit enquiries and applications make up 40% of your Equifax score, while repayment history makes up 38%.
The following factors can impact your score, both positively and negatively.
Credit products
The details of each credit product you hold can affect your score, such as:
- the type of card or loan
- credit limit
- credit provider
- account length.
Repayments
The repayment amount, and how often you paid (or failed to) when the repayment was due factor into your credit score. Late payments that exceed 14 days are listed on a credit report.
Defaults and debt arrangements
Failing to pay a provider when a debt is due is referred to as a default, which can damage a credit score. Defaults typically stay on your credit report for five to seven five years.
Credit applications
Be wary of the number of credit applications you have under your name. If you’re applying for multiple credit cards to boost frequent flyer points, for example, the flurry in applications may negatively impact your score.
Personal information
In some cases, your age, length of employment and time at your current address are used to calculate your score. These data points are typically seen as stability factors — the longer you’ve been employed in your job and lived at the same location, the less risky you may appear to lenders.
What doesn’t affect your credit score?
Your relationship status, how much you earn, or your savings, are examples of things not considered when calculating your credit score. Credit reporting agencies only look into patterns and trends relating to your credit history and profile.
Expect credit score changes
Your current credit score isn’t forever. Credit information (both good and bad) stays on your report for one to seven years, depending on the type of information. Your score will naturally fluctuate over time, based on your financial behaviours. This is why it’s crucial to regularly request a credit report, so you can track your score — especially if you’re planning to get a mortgage or buy a car in the near future. What you do now will affect your borrowing abilities in the future.
Think of credit checks like annual visits to your doctor. It’s essential for good health. Getting a full credit ‘check-up’ will help you see blind spots, reveal errors, and empower better decision-making about your finances.
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