GuidesCredit Score Guide

Australian Credit Score Explained

You’ve probably heard of credit ratings and scores, but do you know what they really are and how they can affect you?

5 min read

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What is a credit score?

Also known in Australia as a credit rating, a credit score is a number used to represent your reputation as a borrower. Calculated based on the information included in your credit report, this number helps lenders determine if they are willing to lend money to you, and, if they are, your credit limit as a borrower, the interest rates they’ll offer and any other applicable terms.

If you choose to find out your credit score, you’ll be given a number that sits somewhere between 0 and 1,000 or 0 and 1,200, depending on the credit bureau used. As a general rule of thumb, the higher the score, the better your credit rating and the more credit-worthy you’ll be considered by financial institutions.

How can I check my credit score?

Not only is it free to check your credit score, but it is also easy to do so. SocietyOne allows you to check your credit score for free without impacting your credit score. It only takes a minute to check your score.

Have your driver’s licence or proof of age card handy, as it helps with verifying your identity and accessing your credit score information.

How is my credit score calculated?

An algorithm is used to calculate your credit score, analyse your credit history, credit profile and past credit applications to get a better understanding of your behaviour as a borrower.

1. Credit history

Your credit history is analysed for patterns that could include:


The presence of high-risk indicators

Defaults, bankruptcies, court judgements and credit infringements can all negatively impact your credit score.


The type of credit providers you’ve submitted applications to

The degree of risk can vary depending on the type of credit provider, with payday loan applications viewed in a different light to loans from a bank.


Repayment history of your credit accounts

Consistent on-time repayments can contribute positively to your credit score.

2. Credit profile

Your credit profile is assessed based on factors such as:


The age of your credit history

Holding a shorter credit history often represents a different level of risk to one that is much longer.


Your personal details

These may include your age, duration of employment and how long you’ve lived at your current address.

3. Credit applications

Your previous credit applications can also impact your credit score, with some the following considered:


The amount and type of credit you’ve applied for in the past

Each type of credit attracts a different amount of risk.


A high number of credit enquiries

Having fewer and more infrequent credit enquiries is typically preferred.


An unfavourable distribution of credit enquiries

Recent credit enquiries are often considered to have different risk associations than much older credit enquiries.

It is important to note that there are three different national credit reporting bodies (CRBs) that operate in Australia, including:

  • Experian
  • Equifax Australia
  • Illion

Different CRBs collect information from companies that choose to report to them and use their own methods to calculate a credit score. For example, Experian and Illion have a score range of 0 to 1000, while Equifax Australia has a score range of 0 to 1200. This means your credit profile may appear differently between credit score providers.

SocietyOne’s credit score calculations are powered by Experian, meaning that your score may differ from those powered by Illion and Equifax. All CRBs listed above allow you to order a free credit report once every 12 months, making it easier to get a better idea of your credit history across all CRBs.

Check your credit score for free in under 1 minute

What is Comprehensive Credit Reporting (CCR)?

Historically, credit reporting has focused primarily on negative credit events, but a newer system, known as Comprehensive Credit Reporting (CCR), ensures that the positive actions you make, such as making monthly payments on time, are noted too. Under this system, lenders are required to share more data, providing a more accurate and comprehensive picture of your credit history than ever before. This approach may assist those with a thin or short credit history and reduce the impact of a single negative event.

Previously, only data about credit enquiries, credit provider names and overdue credit account details had been recorded in consumer credit files. Now, additional information such as the type and amount of credit applied for, credit limits for each account and repayment history are included.

With more information available to CRBs, people may see an improvement in their credit score if they have been good with their repayments.

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What can negatively affect your credit score?


Missing a payment or two

While it may not seem like a big deal, missed payments can reduce your credit score and will remain on your file for 2 years.


Having black marks on your accounts

Bankruptcy, court actions, defaults, having debts with specialty finance (debt collectors) or credit infringements are black marks on your accounts, which can significantly impact your credit score and can stay on your credit file for 5-7 years.


Making too many applications in a short period of time

Every time you apply for credit an enquiry is recorded which remains on your credit report for five years. If there are too many enquiries recorded in a short period of time, it could raise a red flag to your potential lender that your finances are in poor shape.

Tips for improving your credit score


Get on top of your bills & debts

Paying your bills on time each month can help to boost your credit score, using your past behaviour as an indicator of how you’ll act in the future. Doing things such as setting up direct debits, building a budget and letting your creditors know ahead of time if you think you’ll be unable to pay can all help you keep on top of your payments.


Keep your credit enquiries to a minimum

Every time you apply for credit, a credit enquiry is left on your credit report. Having too many credit enquiries in a short period of time can appear to potential lenders that you are desperate for credit or struggling to get approved, even if you’re in good financial standing. To avoid this issue, always do your research and only proceed with an application when you are sure you are ready to apply. Many lenders, such as SocietyOne, also offer quotes that won’t impact your credit score.


Check your credit report for any inaccuracies

Taking some time to check your credit report can help you find details that might be negatively impacting your credit score. Take a look at reports from all three CRBs (Experian, Equifax, illion) to see if anything stands out. If you do find anything that doesn’t seem quite right, clarify it with your creditors or find out more from the CRB.


Do nothing

This may sound ridiculous, but doing nothing can actually help your credit score. Each day that passes without you jeopardising your file gets you a step closer to the expiry dates on credit inquiries and black marks that may be negatively impacting your score.

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What are the benefits of having a good credit score?


Improving your chances of loan and credit card approval

While it doesn’t necessarily guarantee that your application will be approved, having a positive credit history can put you in good stead when submitting your next personal loan, home loan or credit card application. It should also be mentioned that while your credit score is an important factor in the approval process, it’s not the only one considered, with lenders taking other factors, such as your ability to service a loan or credit card, into account.


Get a better deal on loan interest rates

With a good credit score and a proven track record, you’re in a much better place to get a better deal on your interest rates, saving you money in the long-run. It’s important to note that risk-based interest rates are more common among personal loan products than other lending products, such as home loans or credit cards.


Making it easier to reach your life goals

Whether it be a wedding, car, home improvements or even a dream holiday, having a good credit score provides you with far more flexibility when it comes to making large purchases, especially if you lack the initial funds to pay for something in full.

Frequently Asked Questions

A credit score is a number that represents your credit worthiness as a borrower. Your credit score (also known as a credit rating) is determined by a number of different factors such as your borrowing and repayment history, as well as the frequency of your credit applications. The better your credit history is, the higher your credit score will be. Having a high credit score lets lenders know that you make repayments on time and you can manage your credit well.

Your credit score is important for a number of reasons:

  • Your credit score is often used by a credit provider (such as banks, lenders, credit card companies, utilities, and telecommunications companies) to determine the risk of lending you money or extending your credit.
  • It provides you with an opportunity to take actions to improve your score, increasing the chances that your future applications will be approved.
  • Having a better credit score may also give you access to better offers.

To find out your score, download the MoneyMe mobile app. It only takes a minute to check your score.
Have your driver's licence number handy, as we will need it to verify your identity and to access your credit report from Experian.

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SocietyOne cannot and does not access your credit information unless you authorise us to do so. We have partnered with Experian, one of Australia's three official credit reporting agencies, to help our customers access their credit file information.

Experian collects information from a number of different companies that provide credit, such as banks, utility providers, telcos and insurance companies, to deliver your credit report. When you sign up for a SocietyOne credit score, you are simply authorising us to access some of your credit information, including your credit score.