What is a credit score?
The credit bureaus keep a report on you: your credit cards, loans, buy now pay later and other credit, and whether you’ve repaid on time. Each turns it into a score:
| Bureau | Score range |
|---|---|
| Equifax | 0–1200 |
| Experian | 0–1000 |
Under comprehensive credit reporting, your report shows good behaviour too, such as on-time repayments, not just problems. So paying on time steadily builds your score.
What affects your score
- Repayment history: each month you pay on time helps; a payment 14 or more days late can show up.
- Defaults: unpaid debts over $150 that are 60 days overdue can be listed for five years.
- Applications: each one is recorded for five years, and lots of them in a short time can lower your score.
- The type and amount of credit you hold.
- Hardship arrangements Not used to work out your score
- 1 year
- Repayment history Each month: on time or how late
- 2 years
- Credit applications Each one, with the type and amount
- 5 years
- Defaults Even after you’ve paid them
- 5 years
- Serious credit infringements A lender can’t contact you and believes you won’t repay
- 7 years
Checking your own report or score isn’t recorded as an application. Bankruptcy and debt agreements are listed for at least 5 years.
Your card limits count, even if you owe nothing
When you apply for a home loan, lenders treat your whole credit card limit as if you could borrow it, and count a repayment against it. A $15,000 limit can cut how much you can borrow, even with a zero balance. Lower limits or close cards you don’t use before applying.
How to raise your score
- Never miss a repayment. Set up direct debits for at least the minimum.
- Apply for credit only when you need it, and compare with tools that use a soft check.
- Pay down or close cards you don’t need.
- Check your reports for mistakes and ask the bureau to fix them. It’s free.
- If you’re struggling, ask for hardship help early. A hardship arrangement does far less harm than missed payments.
Check yours for free
You can get your credit report free from Equifax and Experian every three months, and if you’ve been refused credit in the last 90 days. Free services also show a score. Because lenders don’t all use the same bureau, check both.
Fixing mistakes
If something on your report is wrong, such as a debt that isn’t yours or a default you weren’t warned about, ask the bureau or the lender to correct it. It’s free. If they won’t, you can complain to the Australian Financial Complaints Authority (AFCA). Be wary of credit repair companies: they charge for what you can do yourself, and can’t remove listings that are correct.
Starting from nothing
A low-limit credit card or small loan in your name, always paid on time, builds a history: comprehensive credit reporting means these good months count. Phone and energy accounts don’t add repayment history, but an unpaid bill can still be listed as a default, so pay those on time too. Myth-busting: checking your own score doesn’t lower it.
For a step-by-step plan, see how to build a credit history from scratch.