What is a credit score?

Your credit score (also known as your credit rating) is a number that represents your risk profile as a borrower. Typically, a higher score represents a lower credit risk, while a lower score represents a higher credit risk. Lenders may use this score along with other criteria when deciding whether to give you credit or a loan, as well as determining what rates and offers you're eligible for.

Knowing your credit score can help you when you're applying for a loan or credit. You can use it to negotiate better deals or understand why your application was declined, as well as spot any potential signs of identity theft.

How your credit score is calculated

An Equifax credit score is a number between 0 and 1,200 and is calculated using information from your credit report.

Your credit report includes a range of personal and financial information, with each carrying a different weight in the calculation:

Type of information Weight
Credit enquiries and applications 40%
Repayment history* 38%
Adverse events 7%
Personal information 6%
Information on credit accounts 4%
Commercial credit information 3%
Address information 1%
Length of credit history 1%

* Positive credit reporting data excludes telco and utility providers

Information stays on your report for varying lengths on time, depending on the type of data. Some examples include:

  • Personal information such as your date of birth and driver's license stays for the life of the report. 
  • Any open credit or loan accounts stay on the report during the life of the product as well as an additional two years after you've closed the account.
  • Bankruptcy or personal insolvency agreements will vary depending on the terms. 
  • Repayment history is kept on file for two years.
  • Credit applications, overdue accounts, and legal actions stay on file for five years.
  • Serious credit infringements are kept on file for seven years.

How to check your credit score

You can check your credit score by downloading a copy of your credit report from a national credit reporting agency.

You're entitled to a free copy of your credit report every three months from each of the three nationwide credit bureaus, within 90 days of being denied credit, and after amendments have been made to your credit information. We recommend obtaining a copy at least once a year to keep an eye on any suspicious activity or evidence of identity theft, which can negatively impact your credit score.

Equifax is one of the three national credit reporting bodies in Australia, and we offer free basic credit reports or paid subscription plans if you want to access your report more regularly and take advantage of additional benefits. We're also the leading bureau for primary lenders, telco & utilities, and auto with 19.4 million credit consumer files.

What is a good credit score?

After downloading your credit report, you'll see a summary of the information in your report including your credit score and how it ranks. This is where you can see whether your score if considered good, bad, or somewhere in between.

At Equifax, we rank credit scores across five different categories:

Below average ≈0–459
Average ≈460-660
Good ≈661-734
Very good ≈735-852
Excellent ≈853-1200

A good credit score improves your chances of being approved for credit or a loan and can help you negotiate a better deal. It's why checking your score before you apply can be a smart move and help you prepare.

If you have a low credit score, you may find it difficult to get approved for credit or a loan. You can seek out alternative lenders that specialise in working with people that have a low credit score. Or, you can take steps to improve your score and apply again later.

How to improve your credit score

A good credit score can help you get the finance you need to reach your life goals, so it's worth taking steps to improve it. These steps might include:

Checking your credit report

Your Equifax Credit Report will show you the top contributing factors that influence you score, so you know where to start to improve it.

Fixing any errors

Report any errors to the relevant credit provider so they can be fixed. If the error is unexplained, it can be a sign of identity theft.

Making payments on time

Budget for any upcoming repayments and consider setting up automatic payments so you don't miss any due dates.

Limiting credit applications

Avoid making several credit applications in a short space of time as they will be recorded and can bring your credit score down.

Tracking progress

How long it takes to improve your credit score will vary, depending on the influences behind the score. Periodic checks of your credit report can help you track progress and stay motivated.

Keeping on top of your credit score

Whether you're looking to buy a car, a home, or go on a bucket-list holiday, having a good credit score can help you get the finance you need to reach your goals. Regular checks of your credit report can help you keep on top of your credit score, be better prepared when applying for credit or a loan, and spot any signs of identity theft. Just remember if you do see any signs of identity theft, it's important to act fast to minimise the potential damage.

To check your credit score, apply online with Equifax today.


Disclaimer: The information contained in this article is general in nature and does not take into account your personal objectives, financial situation or needs. Therefore, you should consider whether the information is appropriate to your circumstance before acting on it, and where appropriate, seek professional advice from a finance professional such as an adviser.