Understanding What A Good Credit Score Means In Australia

Woman Paying Credit Card Bills

Whether you want to take out a home loan, credit card, or secure finance on a new car, understanding your credit score is an integral part of the borrowing process. After all, your credit score is what lenders use to determine how reliable a borrower you are and how likely you will be to make your repayments on time. As a result, your credit score is also the primary determinant of what interest rate you will be offered during your application, which significantly affects the overall cost of your credit.

What is a credit score in Australia?

As with most other countries, your credit score is calculated based on the information that is on your credit report. In short, this report shows a comprehensive record of your financial history, including things such as

  • Your current level of borrowing
  • Your previous history of borrowing
  • A list of all your lenders
  • Whether or not you have made your payments on time
  • Details of credit card/loan applications you have made in the past
  • History of bankruptcies, defaults, and court judgments in your name

Considering all of these things, your credit score is compiled into a number that ranges between zero and 1,200 (depending on the credit reference agency that is being used). In general, lenders use these scores as one of the primary factors in deciding whether or not they offer you credit (and at what cost). As you may have already guessed, the higher your score, the better – and the higher the likelihood that you will be accepted for a loan/credit card.

The leading credit agencies in Australia

There are three main credit reporting agencies; these are Equifax, Experian, and Illion (formerly Dun and Bradstreet). Let’s take a quick look into how each of them operates.


Below Average Average Good Very Good Excellent
Score 0-505 506-665 666-755 756-840 841-1200

Equifax is Australia’s largest credit reporting agency and provides detailed personal and business information across the country. Equifax tracks the credit history of borrowers and sells this information to banks and other financial institutions to help them determine the risk for each of their customers. As you can see from the table above, to achieve a “good” score with Equifax, you need a rating between 666-755.

Interestingly, Equifax is the only credit bureau in Australia with a maximum score of 1200 (as opposed to 1000).


Below Average Fair Good Very Good Excellent
Score 0-549 550-624 625-699 700-799 800-1000

Experian is a data-focused credit agency that allows you to view your report and score for free. Your score is updated each month, which means you can easily keep track of how your current spending/borrowing habits affect your perceived creditworthiness. A “good” score with Experian means you fall within the range of 625-699.


Zero Average Room For Improvement Good Great Excellent
Score 0 1-299 300-499 500-699 700-799 800-1000

Illion is another one of the big three credit bureaus in Australia. They create and keep hold of your credit reports before selling them to banks and other third parties once they request your information. Once again, you can request your data for free, after which Illion will send you a full credit report so you can gain a deeper understanding of your financial profile.

Illion breaks down their credit scores into six brackets, and if you want to find yourself in the “good” column, you will need a score between 500-699.

Are there any fundamental differences between the credit reporting bureaus?

Keeping track of all three of these bureaus while applying for credit can be a bit tricky. However, it’s vital to note that each of them evaluates your creditworthiness differently. Thus, if you want to increase your chances of a successful credit application, you must keep track of each of them separately.

For example, If you want to find the best personal loans in Australia, the banks and other financial institutions that you receive quotes from may all use varying bureaus to assess your risk profile. Since each bureau may put a varying emphasis on specific factors within your credit history, one lender may view you as a trustworthy customer while the other may decline to do business with you.

How to improve your credit score in Australia

Despite each credit bureaus operating slightly differently, the methodology behind improving your score is essentially the same. Remember, your score is by no means fixed. So, if you are unhappy with your score and can’t find a reputable lender that is willing to offer you credit, there are some steps you can take to boost your score. Here are a few things you could do:

  • Always pay your bills on time. Late and missed payments are some of the most damaging factors on your credit report, so make every effort to avoid them if possible. If you ever feel like you cannot make a payment, it’s better to contact your bank and inform them directly rather than miss a payment without reason. They will usually show you some leniency and offer a repayment plan without reporting a missed payment to the bureaus.
  • Apply for credit sparingly. Lenders don’t like it when they see multiple credit applications in a short period since it implies that you are desperate or over-reliant on borrowing. In addition to this, when you apply for credit and get rejected, this is visible to all other lenders via your credit report. As a result, a long string of rejected applications can raise concerns for lenders, which may make them more cautious when assessing your profile.
  • Close down old accounts. One of the main factors that lenders look at is the current level of credit that you have access to. If you are applying for a $5,000 loan but already have access to a further $10,000 on your credit cards, they may not consider your application. Of course, the circumstances of each case are different, although if you have any unused credit facilities, it would be wise to shut them down (or at least lower the limit).
  • Keep tabs on your credit score. As mentioned in this article, regularly checking your score can help you to improve your financial situation. Not only does it help to highlight the weak areas in your financial profile, but it also gives you a chance to dispute any inaccuracies and make amendments before sending further applications.

Final word

If you plan on applying for credit any time soon, you must understand how lenders will assess your creditworthiness and determine whether or not your application will be successful. As discussed, the three main credit bureaus in Australia are Experian, Equifax, and Illion. While each of these organizations uses its own scoring system to categorize what should be considered as a “good” credit score, they tend to look at (and assess) the same elements within your credit file. With this in mind, you should strive to maintain a good standing across all of your financial accounts while keeping an eye on your credit scores across these three agencies if you want to maximize your chances of securing (cheap) credit.

The views expressed in this article are those of the authors and do not necessarily reflect the views or policies of The World Financial Review.