What is a good credit score Australia

Your credit score, which is sometimes referred to as your credit rating, will generally range from 0 to either 1,000 or 1,200 depending on the credit bureau calculating it. In all cases, the higher the score, the better.

To make it easier to visualise, we’ve provided the table below to help you understand what constitutes a good credit rating in Australia – bureau by bureau.

If you want to see how your score stacks up to the scores below, simply sign up or login to Credit Simple to see your illion credit score for free forever!

Here’s a breakdown of credit score ranges from the three major credit bureaus in Australia:

illion score via Credit Simple

Equifax

Experian

800 – 1000

833 – 1200

800 – 1000

700 – 799

726 – 832

700 – 799

500 – 699

622 – 725

625 – 699

300 – 499

510 – 621

550 – 624

0 – 299

0 – 509

0 – 549

Using illion as an example, here’s what appearing in each credit score range (as well as getting a perfect score) could mean for you and your finances.

Credit score 1,000 (perfect score)

If you scored 1,000, you’re seriously a credit unicorn and appear in a very exclusive club consisting of just 3.5% of all Aussies.

You’re likely in an older age bracket and have spent a lifetime building positive credit actions, such as prompt payments, sensible applications and limiting your lines of credit.

You’ll have good bargaining power when it comes to taking out a loan, and shouldn’t have any trouble landing lower rates and better terms than your peers.

800 – 999 (excellent)

For all intents and purposes, a personal credit score above 800 might as well be a perfect score since it represents a strong credit history built up over time.

Lenders should be eager to offer you credit as long as it’s within your ability to pay off, with attractive rates and terms.

700 – 799 (very good)

With a personal credit rating in this range, you should have no problem getting a loan as long as you have the ability to pay it off. You might not get the same great rates as someone with an excellent score but you shouldn’t do too badly either.

In many cases, all you have to do to improve your rating is to limit the number of credit applications you make, because making too many can bring your score down.

500 – 699 (average)

An average score is actually a fairly healthy score and in most cases means you haven’t experienced any major credit mishaps, like defaults or bankruptcies.

Avoiding late payments and limiting the number of credit applications you make are two great ways to bring up your score.

300 – 499 (fair)

This credit score range is below average, but you probably don’t have any extremely negative problems with your report, such as a bankruptcy.

In fact, you may just be in a younger age bracket, which lenders classify as riskier. Tighten up slightly on your credit behaviour and you should see improvements before too long.

0 – 299 (low)

If you’re here you probably have payment defaults or other negative data on your file. If that’s not the case, then it could be because you consistently pay your bills late.

In any event, this is considered the riskiest group to lend to so you’re better off trying to improve things sooner rather than later.

Paying your bills on time will actually improve your personal credit score, so automate your credit card and other loan payments. Avoid making multiple credit enquiries and wait for any defaults to be cleared from your record, a process that can take up to five years.

In the past, banks and other financial institutions had access to a limited amount of information to determine your ability to borrow money. But since the rollout of a new system in 2014 – called 'positive credit reporting' or 'comprehensive credit reporting' – companies now have a more complete and accurate picture of your financial health.

This could impact the amount of credit you can get - and importantly, the interest rate and other terms they might offer you.

What is a credit score?

A credit score is a measurement of your credit worthiness. It tells financial institutions how risky or how safe it would be to lend money to you. It's based on your financial history and your ability to repay debt.

Your credit score represents, in one number, all the information on your credit report. This includes information about you that is stored with banks, credit card companies, store cards, telecommunication providers and utility companies, as well as the public record.

Who determines your credit score?

There are three main companies that provide credit scores in Australia. The largest is Equifax (which also owns 'Veda'). The other two are Experian and Dun & Bradstreet.

Depending on the agency, your score will be a number between zero and 1,200 or zero and 1,000. The score sits on a five-point scale: excellent, very good, good, average and below average. The higher the score, the higher your credit-worthiness. 

How do they calculate a credit score?

All of the agencies calculate the scores in similar ways. An Equifax Score, for example, is broken down into the following components: credit applications (51 per cent), repayment history (30 per cent), credit limits (3 per cent), adverse events (10 per cent), personal information (3 per cent) and credit report age (3 per cent).

Your credit score is also dynamic. It varies from month to month as your financial circumstances change.

Lenders consider various factors when looking at your application, but the credit score plays a significant role in the final decision.

The average Australian has a healthy credit score

In 2016, the average Equifax Score for Australians was 757, which is considered a very good score.

The average score for millennials was a bit lower, at 712. That's partly because younger people haven't had as much time to establish their credit rating. Also, young people generally own fewer assets, so they're not able to offer collateral on loans, which makes them a higher risk.

Are you young or new to Australia?

Young adults who have never applied for credit, and people who are new to Australia, may not have a credit score.

Your credit file will be created when you first apply for credit or a loan. Your initial score will probably be a low score because you have no credit history.

Equifax offers some great tips to improve your credit rating over time. The most basic one is to make sure to always pay your bills on time. (And if you're struggling to do that, to talk to your creditor to see if you can work out an arrangement.)

Checking your credit rating may protect you from fraud

An important way of keeping control of your identity is keeping tabs on your credit score. Check your credit rating and credit report regularly to ensure all credit enquiries and listings are correct.

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