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Published October 28, 2022
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12 Questions About Credit Scores and Reports

Knowing how credit reports and ratings work will help keep you on track to achieve your financial and lifestyle goals.

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Your credit score is more important than you might think. It’s not just some abstract metric without meaning. It’s the accumulation of your past associations with credit — how much you owe, how you repay it, and how often you apply for it. Your score provides a picture of how responsible you are at handling credit. 

If you’ve made mistakes in the past, don’t let this paralyse you. Use the credit report to know where you stand so you can take remedial action to improve your score, which is not fixed. You’ll get into the green in time and with good financial habits. 

1. How important is your credit score in Australia? Does it matter? 

If you’re planning to apply for a credit card, upgrade your car, buy a house or build a business, having a high credit score will improve your chances of gaining a loan approval at the most competitive rate.

A ‘good’ credit score for Equifax is 622+, for Experian it’s 625+, and for Illion it’s 500+. With a healthy credit score or credit rating, you can negotiate better deals and pay less interest over time. 

2. What’s the average credit score in Australia? 

The current national average credit score is 695, though the three major reporting bureaus have different methods for determining their scores.

Just as credit scores fluctuate, so does the national average. Credit scores vary in different states, with research showing that the ACT and Victoria have the highest averages. 

Credit scores also vary by age.

Age groupAverage credit score
Under 21742-743

3. What credit score do banks use in Australia? 

There are three main credit reporting bodies in Australia: Equifax, Experian, and Illion. The Big Four banks — Westpac, ANZ, NAB, and the Commonwealth Bank — work with all three and share relevant information with each bureau. 

The credit rating ranges for these bureaus are as follows: 

Below Average0-4590-5491-299
Very Good735-852700-799700-799

4. Do buy now, pay later services affect credit scores? 

It depends on which buy now, pay later company you use. AfterPay doesn’t affect your credit score or standing, as they don’t do credit checks. ZipPay, on the other hand, ‘may need to perform credit checks to verify your details and confirm you can make repayments.’ 

Before you use BNPL, check if the provider requires your credit score. And just like any line of credit, always make your payments on time. 

5. What’s the minimum credit score needed for a personal loan?

You should aim for a ‘good’ rating. Going by Experian’s range, this is between 625-699. Having a good rating will help reduce the interest rate and fees, while also giving you a higher borrowing capacity with personal loans — and even credit cards

6. What’s the minimum credit score needed for a car loan? 

Like personal loans, there’s no industry or nationwide credit minimum for a car loan approval. However, use your reporting bureau’s scoring rating to understand your creditworthiness. Before applying for a car loan, aim for a good credit score. 

7. What’s the minimum credit score needed for a home loan? 

A mortgage will likely be your largest debt so it pays to increase your credit score before applying to borrow a home loan. You’ll save more money over the term of the loan and pay less for your house. Aim for at least a score that falls under the “good” credit rating, but if possible, reach the ‘very good’ or ‘excellent’ categories. 

A 500-700 credit score is considered average. To strengthen your application, especially in a hot real estate market, you’ll need to improve your credit score if you’re in this range. A score of 800 or above will put you in the top 20% of borrowers. 

8. What’s the minimum credit score needed for a credit card? 

It’s best to have a good credit score before you apply for a credit card. Given the high interest rates on credit cards, apply when you’re happy with your credit profile. 

9. What’s the minimum credit score needed for a mobile phone contract? 

Phone companies will perform a credit check if you’re opening up a plan with a new device. Telstra connects with all three credit agencies, whereas Vodafone and Optus only use Equifax and Illion. Again, aim for a minimum of a good credit rating. 

10. What should you do if you don’t have a credit score?

Depending on the loan you’re looking for, you may have options if you don’t yet have a credit score. For example, there are secured cards with low eligibility requirements you can use while you build up your credit profile. However, be wary of high interest rates for these types of products. 

For mortgages, guarantors can come in handy for applicants with low credit scores.  

11. How long does a bad credit rating last in Australia? 

It can take between one to seven years to erase a bad credit record. General financial information stays on a credit report for one year. Your repayment history and current consumer credit obligations will remain for two years. Credit enquiries and court judgements are listed for five years. Bankruptcies are erased from credit reports after five years, and serious credit infringements after seven years. 

Length of timeFactor
1 yearFinancial hardship information
2 yearsRepayment history and current credit obligations
2 yearsOpen credit accounts or recent closures
5 yearsCredit enquiries, defaults, bankruptcies, and court infringements
7 yearsSerious credit infringements.

12. When does a default get removed from your credit history in Australia? 

Defaults will stay on your credit history for five years. Reporting agencies classify a consumer default as a debt of over $150 that is more than 60 days overdue. A default leaves a red mark on your credit report for a long time. This is why automating your repayments can be helpful, so you don’t forget when your various obligations are due. 

Check all your contact details are up to date, so banks and lenders can let you know you missed the payment within the 60-day window. 


What Is a Good Credit Score?

What Is a Good Credit Score?

A good credit score varies by credit agency: 661+ for Equifax, 625+ for Experian, and 400+ for illion.

How to Get Your Free Credit Score and Credit Report

How to Get Your Free Credit Score and Credit Report

Australia’s three major credit reporting bureaus must let give you free access to your credit report and score every three months.

What Affects Your Credit Score?

What Affects Your Credit Score?

Your credit scores are determined by several factors, such as whether you pay bills on time and the length of time you’ve used credit.

What to Know About Credit Reports in Australia

What to Know About Credit Reports in Australia

A credit report is a comprehensive record of your credit history and overall creditworthiness.

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