What Is a Good Credit Score?

If you’ve ever applied for a loan, you may think about what is a good credit score and how do you get one? In Australia, a credit score is given to anyone dealing with a bank or lender when they’ve borrowed money. The credit scores are a ranking system, and they’re designed to show lenders if a particular person is a low-risk candidate for a loan. People with a high credit rating (also known as a low-risk credit score) can find it easier to get a loan than others.
 
You can check your current credit score by ordering your report through Equifax. In Australia, everyone is entitled to receive their free report once every 3 months or within 90 days of being denied a loan. Reading your credit history can tell you a lot about your debt status. In some reports, you may find reporting errors or other inaccuracies, and you can request the reporting agency to follow these up. If you find any unauthorised loans taken out in your name, you may be a victim of identity theft or fraud. While it may take time to clear out issues associated with ID theft, the sooner you start, the more quickly your credit score will recover.

 


What is a good credit score?

 


There are several different types of credit scores, and your particular score may vary based on who you check it through. At Equifax, we use a score range  from 0 to 1,200 to calculate your credit rating. Our credit score range is broken down according to these classifications: below average (0 to 459), average (460 to 660), good (661 to 734), very good (735 to 852), and excellent (853 to 1,200). When lenders check your score through Equifax, they’ll find your credit rating, and it can contribute towards the approval of your loan or credit card. Banks and other lenders may use other factors to qualify you for a loan, but having a good credit rating is an excellent start.
 
You may consider any credit rating from very good to excellent as suitable for applying for a loan. If you have a rating below these classifications, you may need to undergo a credit repair. A bad credit history may affect your score negatively, but it is possible to improve your credit rating by making positive changes to your financial situation. These changes include keeping any loan payments up to date and clearing out any old debts. If you have any bills in your name, make sure these are all paid on time. 
 
You can order your credit report through Equifax, and we’d recommend checking it at least once per year. However, if you’re in the process of building your credit score rating, you can apply for our subscription service, and we’ll inform you of any changes to your credit report. We’ll also provide insurance to cover you for losses due to a stolen identity. In addition to our insurance, we’ll also monitor the dark web and notify you if any of your details are being sold. This reporting can alert you regarding possible identity theft, and you can take preventative steps to stop it from becoming a problem. 

 


What are the factors that affect your credit score?

 


A credit score will be calculated based on several different factors. Lenders will report information to the credit reporting agency about your financial situation. This information can include what loans you have active and how much you need to repay, whether you’ve been late on any payments to your loan or credit card, and the total value of your loans. If you’ve had unpaid bills resulting in court judgements, defaults, and bankruptcies, these will all be included in your report.
 
Most transactions will remain on your credit history for around two years, with issues like defaults staying on your credit file for at least five years. A serious credit infringement (such as fraudulently obtaining credit) will stay on your record for seven years.
 
While having a problematic credit history is not ideal, you can start taking the right steps to improve it. For example, if you had a default on a bill four years ago, but otherwise your history has been good, a bank may choose to overlook that error in judgment. If you’ve been recently denied credit, you can get a copy of your credit history and see if anything stands out that can be fixed easily.

 


How to get a good credit score?

 


The best way to get a good credit score is to have a loan (including credit cards) and keep it well maintained. This means that you’ll need to make payments on time and have the loan paid off when intended. If you’ve never had any credit before, you may find it challenging to get a large loan (such as a home loan mortgage). Banks and lenders prefer to offer loans to people who have a proven history and are shown to be financially responsible. In some cases, people with a good credit score rating can be offered better loan terms, including a reduced interest rate.
 
If you’re looking to borrow money in the future, building a good credit rating is ideal. You can subscribe to our reporting services plan at Equifax, and we’ll monitor your file and report on any changes. This reporting service will provide information and help you know when you’ve achieved your credit rating goals.

Get your free Equifax Credit Report* or check out our subscription plans including tools to help manage your credit profile and protect your identity.


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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.