Credit Score basics – understanding your Equifax Credit Score

Your Equifax Credit Score is a summary of your credit information held by Equifax. Finance and Utility providers may take into account your Credit Score when you apply for credit. Your Credit Score is derived from information held on your Credit Report. Your Equifax Credit Score will be a number between 0-1200. In simple terms, the higher your Equifax Score, the better your credit profile and the lower a credit risk you are.

There are a number of key contributing factors that are taken into consideration when generating your Equifax Credit Score:

• Type of credit provider. The type of credit provider making an enquiry on your Equifax Credit Report (that is the type of credit provider you’ve applied for credit with) may impact your Equifax Credit Score. For example, there may be different levels of risk associated with approaching a bank, store finance provider, hire-purchase and utility company for credit. What’s more, research shows that there’s a different level of risk associated with lenders in particular industries. For example, a non-traditional lender may have a different level of risk than a bank or credit union
   

• The type and size of credit requested in your application. Both the type of credit and size of the loan or credit limit you have applied for in the past can have an impact on your Equifax Credit Score. For example, mortgages, credit cards, personal loans and store finance may carry different levels of risk
   

• Number of credit enquiries and shopping patterns. Every time you apply for credit and a credit provider obtains a copy of your report, an enquiry is added to your credit report. This can include any loan, mortgage or utilities applications you may make. Shopping around for credit and applying to a number of different credit providers within a short space of time may negatively impact your Equifax Credit Score. It flags you as a greater risk than infrequent applications for credit with a few credit providers
   

• Directorship and proprietorship information Directorship and proprietorship information on an Equifax Credit Report may impact your Equifax Credit Score. If you’re a director or a proprietor it’s important to check the individual and commercial sections of your credit report
   

• Age of credit report. The date your Equifax Credit Report was created may impact your Equifax Credit Score. For example, a relatively new file may indicate a different level of risk than an older report
   

• Pattern of credit enquiries over time. The spread of activity over an Equifax Credit Report’s life to date can have an impact on your Equifax Credit Score. For example, a relatively new credit file with many enquiries may represent a different level of risk than an older file with only a few credit enquiries
   

• Your personal details. Your Equifax Credit Score takes into consideration personal circumstances, such as age, as well as ‘stability factors’, such as how long you’ve been employed in your current position and how long you’ve resided at your current residential address, to help assess credit risk
   

• Default information. Default information on your Equifax personal or business Credit Report, such as overdue debts, serious credit infringements or clearouts, may negatively impact your Equifax Credit Score. On the other hand, a lack of default information in your file may positively affect your Equifax Credit Score
   

• Court writs and default judgements. A court writ or default judgement on an Equifax Credit report is an indicator of increased risk and may negatively impact your Equifax Credit Score. On the other hand, a lack of court writ or default judgement information would indicate a reduced level of risk
   

• Commercial address information. Information such as location and the length of time you have resided at your current business address is a measure of stability and may impact your Equifax Credit Score

It is important to note that the way the Equifax Credit Score is used in practice by lenders may differ to the way it is displayed in the Equifax Credit and Identity portal. Each lender may also apply their own lending criteria and policies, and in some cases their own scores, which is why some lenders may approve your application while others will not. 

If you don’t have an Equifax Credit Score, it’s probably because you are not credit-active or haven't applied or used credit. Children don’t have Equifax Credit Scores and some older Australians and those new to Australia may not either.I f you fall into one of the categories of insolvency such as bankruptcy, you may not have a credit score either as Equifax does not score credit files where insolvency information is present.

Your Equifax Credit Score is calculated based on the information on your Equifax Credit Report at a point in time. As the information on your Equifax Credit Report changes so will your Equifax Credit Score.

Your Equifax Credit Report is updated as your repayment history information on accounts is updated each month and as other information is added or removed from your Equifax Credit Report. Information from credit providers can include credit enquiries (resulting from credit applications you’ve made) and overdue debts. It can also include publicly available information such as default judgements, court writs and Bankruptcy Act information.  

A Credit report is the detail of your credit history to date whereas a credit score is simply a number which is derived from the information on an individual’s credit report as held by the credit reporting body (CRB) when the credit score is requested.

Your Credit Score does not form part of your Credit Report, rather it is derived from the information available on your Credit Report at a specific point in time.

You can get your free Equifax Credit Report here or to view your Credit Score, you may consider subscription plans from Equifax. 

The Equifax Score Tracker is a tool that tracks your Equifax Credit Score over time. Each month it charts your Equifax Credit Score, helping you to gain insight into what is impacting your Equifax Score and how you could improve it.

When you sign up to an Equifax Credit Protect or Equifax Credit and Identity Protect subscription, each month we’ll generate an Equifax Credit Score which you will receive together with a graph that charts this. You’ll also receive information regarding what items on your Equifax Credit Report contributed to your Equifax Credit Score at that point in time.

Your Equifax Credit Score may change every time new activities, such as credit enquiries or loan defaults, are recorded in your Equifax Credit Report.

It’s important to note that when a credit provider applies to obtain a Credit Score calculated by Equifax to use or review in the process of assessing your application for credit, the Equifax Credit Score that the credit provider receives is calculated at the time they do their credit check on you for a credit application and may change depending on the circumstances in which you have made a credit application. The Equifax Credit Score that you receive through an Equifax Credit Protect or Equifax Credit and Identity Protect subscription is not necessarily the same credit score a credit provider would obtain from Equifax. Each lender may also apply their own lending criteria and policies, and in some cases their own scores, which is why some lenders may approve your application while others will not.

However, by monitoring your Equifax Credit Score over time, you’ll see how your Equifax Credit Score changes depending upon the information on your Equifax Credit Report, and be able to track changes over time. You’ll also have a better indication of how lenders see you based on the information on your Equifax Credit Report.

Your Equifax Credit Score is calculated at a point in time and will change each time new information is added to your Equifax Credit Report.

With an Equifax subscription that includes an Equifax Credit Score, you will receive a new Equifax Credit Score in the portal each month. A monthly email will notify you that your new Equifax Credit Score is available within the Equifax Credit and Identity portal.

Please note that while Equifax calculates your Equifax Credit Score every month as part of Score Tracker, when a credit provider uses an Equifax Credit Score as part of assessing an application for credit, the score they receive is calculated at the time they do their credit enquiry and may be different to your Equifax Credit Score in the Score Tracker. The way the Equifax Credit Score is used in practice by lenders may differ to the way it is displayed in the Equifax Credit and Identity portal. Each lender may also apply their own lending criteria and policies, and in some cases their own scores, which is why some lenders may approve your application while others will not.

Contributing factors are the items on an Equifax Credit Report that impact the Equifax Credit Score at a point in time. With an Equifax Credit Protect or Equifax Credit and Identity Protect subscription you will see the top four contributing factors. The arrows next to the contributing factors show how much impact, positive or negative, that factor played in your Equifax Credit Score.

Yes, in certain circumstances. For instance, if you have gone guarantor for a company loan that is then not repaid on time, or at all, your personal Equifax Credit Score will be negatively impacted. (If a credit provider wishes to access both your consumer credit and commercial Credit Files – aka your Credit Report – as part of assessing an application for credit, they will need your consent prior.)

It will cease to exist. Equifax does not generate an Equifax Credit Score for Equifax Credit Reports where insolvency information is present. This includes all six categories of insolvency:

1. Bankrupt (excluding discharged, Part X and Part 1X)
2. Part X Debt Agreement (excluding discharged)
3. Part X Debt Agreement (discharged)
4. Discharged Bankrupt (excluding Part X, and Part IX Debt Agreements)
5. Part IX Debt Agreement (excluding discharged)
6. Part IX Debt Agreement (discharged)

Individuals can enter into Debt Agreements, in certain circumstances. These are not a type of bankruptcy but are, in fact, a way an individual can avoid going into bankruptcy.

The different Equifax Credit Score rating helps you to understand your level of risk, based on your Equifax Credit Score, compared to the Australian credit-active population held by Equifax.

The Equifax Credit Score rating is based on historical analysis that determines how likely an adverse event, such as a default, court judgement, personal insolvency or similar, is to be recorded on a credit report in the next 12 months. This a key determining factor in whether you are likely to be able to repay future credit. 

• Below average  - There is an above average possibility an adverse event will be recorded on a Credit Report the next 12 months
   

• Average - There is an average possibility an adverse event will be recorded on a Credit Report in the next 12 months
   

• Good - Scores in this category indicate that an adverse event is less likely than average to be recorded on a Credit Report in the next 12 months. The odds of no adverse events occurring on your Credit Report in the next 12 months are better than the average population odds
   

• Very Good - It is unlikely an adverse event is to be recorded on a Credit Report in the next 12 months. In other words, the odds of no adverse events occurring on your Credit Report in the next 12 months are more than 2 times better than the average population odds
   

• Excellent) - An adverse event is highly unlikely to be recorded on a Credit Report in the next 12 months. In other words, the odds of no adverse events occurring on your Credit Report in the next 12 months are more than 5 times better than the average population odds.

Equifax reviews the Australian credit-active population scores regularly and the Equifax Credit Score rating is calculated to take into account population and economic changes.

It is important to note that the way the Equifax Credit Score is used in practice by lenders may differ to the way it is displayed in the Equifax Credit and Identity portal. Each lender may also apply their own lending criteria and policies, and in some cases their own scores, which is why some lenders may approve your application while others will not.

You can get your free Equifax Credit Report here but to get access to your Credit Score, you may want to consider our subscription plans from Equifax.