If you're new to Australia and starting a new life, you may want credit or a loan to help get you started whether you need a car, furniture, or an account to help manage expenses. But to access credit, you’ll usually need to show lenders you have a good credit score. 

Unfortunately, if you have credit history from your home country, it won’t carry over to Australia. Instead, you’ll need to start building a new credit profile so your credit activity can inform your new score. 
In this guide, we’ll share what you need to know about your credit score, how it impacts your financial future in Australia, and what you can do now to improve your access to finance.

Funding your new life

Whatever your plans are for your new life in Australia, it’s likely you’ll need money to make them happen. While you can use existing savings or make plans to save more, you might also need to apply for credit or a loan to cover big-ticket items. Credit is a financial arrangement where you agree to pay back the money you’ve borrowed under the contract terms you sign. Credit can also be referred to as applying for funds, finance, a loan, or a credit contract. 

Common types of credit offered in Australia include:

• Loans such as personal loans, home loans, and Buy Now Pay Later (BNPL) facilities. This type of credit gives you money to buy a specific good or service.
• Lines of credit such as credit cards and overdraft facilities. This gives you access to funds you can draw down from to purchase any goods or services you choose.
• Service contracts which cover utilities such as your mobile phone, internet services, electricity, gas, and water.

Where can you get credit?

• Big banks
• Regional banks
• Credit unions
• Mutual societies
• Non-bank lenders
• Credit card issuers
• Personal loan providers
• Business loan providers

In Australia, you can apply for credit once you’re 18 and meet the eligibility criteria of the lender or credit provider. Eligibility criteria vary across lenders, credit providers, and products but typically include key information such as your income, assets, spending habits, employment history, and credit score.
 

Credit score basics – what you need to know

A good credit score is essential for getting approved for credit. Before we dive into the details about how your credit score can impact your financial health, here are some key terms you need to know:

What is a credit score?
A credit score is a number that represents your level of risk as a borrower. Generally, the higher the number, the lower the risk, and the more likely you are to repay the credit or loan amount. Lenders may use your credit score (along with other criteria) when deciding whether to give you credit, how much to give you, and at what rate.
 
Your credit score is calculated by credit reporting agencies such as Equifax, which is Australia’s largest consumer credit reporting agency. At Equifax, we use a unique range of data points to assess your credit position and calculate your credit score, a number between 0 and 1,200.

What is your credit rating?
A credit rating is a range that ranks your credit score. The higher your credit rating, the better your chance of being approved for a loan. At Equifax, we group credit ratings into the bands below:
Excellent              (853 to 1,200)
Very good            (735 to 852)
Good                  (661 to 734)
Average               (460 to 660)
Below average     (0 to 459)

Credit rating bands can differ across different credit reporting agencies, so a credit rating from one agency is not necessarily equivalent to others. You can find your credit rating in your free Equifax credit report and your credit score and rating when you subscribe to an Equifax subscription.

What is a credit report?
A credit report contains information about your credit history and risk profile as a borrower and is prepared by credit reporting agencies. Lenders and credit providers usually request a copy of your credit report from their nominated agency when assessing your credit or loan application. You can access your credit report summary for free every three months or monthly via an Equifax subscription.

What is your credit history?

Your credit history is a record of how you’ve managed credit and includes information such as:

• Details of any credit applications you’ve made, including the amounts applied for.
• Details of any credit products you’ve held in the past five years.
• Your repayment history for each credit product, including any late or missed payments.
• Defaults on any utility bills or credit facilities.
• Other information such as insolvency, court judgments, bans, and complaints.
   

Different credit activities will be recorded in your credit history for various lengths of time, depending on the data type. Personal identity information, including your name, date of birth, gender, driver licence, and address history, is held for the life of the credit report. For other information on your credit report, here are some typical timeframes:

Note that for some information, the timeframe will vary. For example, information about consumer card accounts you hold can be held for two years after the end of the loan. Similarly, information about bankruptcy, debt agreement, or personal insolvency agreements will vary depending on when the agreement was entered and ended.|
 

Your credit score and getting established in Australia

When creating your new life in Australia, you might need credit to pay for big-ticket items such as a car or furniture. But if you’ve never borrowed money in Australia or paid bills in your name before, you may not have a credit score and can struggle to get credit. With the right strategies, you can build your credit score now, improve your chances of getting approved, and set yourself up for success.
 

How to build your credit score

1.   Understand what affects your credit score

To start building your credit score and credit profile, you need to understand what behaviour affects your credit score – both positively and negatively.

2.   Take steps to build your credit score

While there's no guaranteed way to develop your credit score, you can take steps to start building your credit history. Keep in mind that you don’t have to follow all the tips to see results, so choose a few from the list below to get started.
 
Tip #1 Establish a credit profile
If you’ve never had credit in Australia, then you won’t have a credit profile. You can start building your profile with a credit report, which is generally established when you make your first application for credit. This could be when you apply for a post-paid mobile phone contract, utilities account such as electricity, gas or water, an internet contract, credit card, or store finance.

Tip #2 Provide personal information
Once your credit report is established, you can add more information to your report. Contact Equifax to offer information to help fill in the blanks with information such as your address, contact information, and employment details.

Tip #3 Apply for a credit card or personal loan
Apply for a credit card or personal loan and pay at least the minimum monthly balance to show you can meet your obligations. Make sure to talk to the lender about your chances of getting approved beforehand, as too many credit applications can hurt your credit score.

Tip #4 Switch to a post-paid phone plan
If you’re currently on a prepaid mobile phone plan, consider switching to a post-paid contract to help avoid any missed payments and potential defaults. 

Tip #5 Pay bills on time
Paying bills on time helps build a record of consistent, on-time payments that may improve your score. Late payments can be recorded on your credit report and may impact your credit score. Consider setting up automatic payments and switching to email notifications to help avoid missing any repayments.
 
Tip #6 Engage in positive credit behaviour
Positive credit behaviour is included in your Equifax credit score calculation. Examples include:

• Making consistent, on-time payments
• Having some credit or loan exposure

Tip #7 Avoid multiple debts
If you have too many debts, you can struggle to lift your credit score, even if you make repayments on time. Keep the number of debts as low as possible and focus on consistently making repayments.
 
It’s important to consider your personal situation to decide which path will help you reach your financial goals.
 

3.   Track your progress

To help you track progress, you can access a free summary of your Equifax credit report every three months. Use our guide on how to read your credit report to help you understand any changes and identify changes.

Build financial foundations for your new life
Building your credit profile takes time. To help you track progress, you can access a free copy of your Equifax credit report every three months. Use our guide on how to read your credit report to help you understand and identify any changes.
 
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