Credit Score

A credit score is a number that evaluates a person’s ability to pay back debt. If you have a good credit score, you may find it simpler to obtain some loans, mortgages, and even phone contracts. Additionally, it will affect borrowing costs because credit providers give better terms to borrowers with better credit scores. Your score may also vary based on the credit scoring model used and the data supplied to the credit bureaus. 

More details on what constitutes a good credit score and how to raise it are provided in this article.

What is a credit score?

Your credit score is a figure that represents both your creditworthiness and your money management skills. It is determined by examining your accounts, including your existing debt or loans, the accounts’ current payments, and the frequency of your payments.

This rating or score is one of the criteria considered by lenders when deciding whether to provide credit or make a loan. Depending on the credit bureau, it may range between 0 to 1000, or sometimes 1200. Additionally, your credit score will often range from below average (0–459, average (460–660), good (66–734), very good (73–852), and exceptional (850–859) on a five-point scale (853-1200). Your likelihood of receiving credit increases with your score because it reflects your previous good financial behaviour.

How does a credit score work?

The five bands that make up a credit score each indicate a different level of creditworthiness to the creditor. Equifax, along with Experian and Illion, is one of three major credit scoring bureaus in Australia. You can get a copy of your credit score and credit report from these credit scoring bureaus.

Your credit score typically falls between 0 and 1,200. Equifax credit ratings start at 661 and increase to “Very Good” at 735 and “Excellent” at 853 or higher. Your credit score increases with better financial behaviour. Your credit report contains a history of your credit, including any credit or loan products you may have used, your repayment record, any credit or loan applications you may have submitted, and any bankruptcies, defaults, or court judgments.

The average credit score in Australia is 695.6.

Benefits of having a high credit score

Loan negotiating power

If you’re looking to buy a new home, car, or personal loan, it can be helpful to have a high credit score. You may find that you have more power to negotiate a better interest rate on your home, car, or personal loan than you would if you had a lower credit score.


Better chance of approval

Lenders consider a lot of factors before approving a credit card or loan application, and your credit score will be one of the most influential factors. The amount of credit you’re seeking and your present financial condition, including any outstanding loans you may have, can affect the outcome of your application. It is important to note that, whilst having a strong credit score is advantageous, it does not guarantee loan approval.


Greater borrowing capacity

If you have a high credit score, banks and lenders may be more inclined to let you borrow larger loan amounts because you have already shown that you can make your repayments on time. Having the ability to borrow more money may be advantageous but you should also think about whether you would be able to afford repayments without straining your budget.


How can I check my credit score?

You can check your credit score for free on Tippla.

You will then be required to create an account and submit personal information, such as

  • Name
  • Email address
  • Birthdate
  • Mobile Contact
  • Address

Your credit report includes your personal information. These agencies will thus ask you to verify your identity. To prove your identification during the verification procedure, you must present one of the following documents:

  • Driving License
  • Identity Card
  • Passport
  • Medicare Card

How is my credit score calculated?

It depends on the credit bureau. When a credit score is requested, a credit reporting bureau generates it using information from your credit report. An algorithm is used to determine your credit score using data from your credit file, which is sent to credit bureaus by credit providers, credit card issuers, and utility providers. Your credit score is based on several variables, such as trends in your credit history, features of your credit profile, and parts of your credit applications.

  • Patterns in your payment history. Your credit score is calculated by looking at the patterns in your credit payment history which contribute 35% of your credit score. The more often you make a payment, the higher your credit score will be. Late or missed payment fees can negatively affect your credit score. If you have late or missed payments, start paying the bills on time to improve your credit score.
  • The number of new credit and credit inquiries. 10% of your credit score is influenced by the total amount of new credit and applications for credit. It considers the number of recent accounts you have opened and the recent hard inquiries on your credit report. It may be a sign of higher credit risk if there are too many new accounts and inquiries as it can often indicate financial distress.
  • Credit-to-debt ratio. Credit to debt ratio is the amount of debt you have compared to your accessible credit, also known as credit utilisation. It makes up 30% of your score. It’s calculated by dividing your monthly credit consumption by the entire amount of credit you have available. So, if you have three credit cards with a total credit limit of $10,000 and a combined amount of $3,000 on all three, your usage ratio is 30%.
  • Variety of types of credit you are using. It refers to the kind of credit you are utilising and makes up 10% of your credit score if you have a wide range of credit options, including instalment loans, credit cards, and student loans.
  • Length of credit history. 15% of your score is determined by how long you’ve used credit, taking into consideration both your oldest and newest accounts as well as the average lifespan of all your open accounts. In general, your scores increase the longer you’ve utilised credit.

How to improve your credit score


Pay off your debts

Your credit score will increase if you pay off your debts. Credit reports involve timely repayment of credit or loan services to indicate positive credit reporting. However, your missed payments may be recorded on the account. You should agree on a suitable loan term payment with your credit card company or lender.

Don’t miss any payments

Making on-time payments, such as your phone and energy bills, will improve your credit score. A default may be recorded if the payment is delayed by more than 60 days and is more than $150. Defaults are some of the most significant negative indicators that may show up on a credit report.

Keep track of your expenses

You can manage your debt and raise your credit score by budgeting and keeping track of your expenses, credit card, and loan balances. Tracking your spending and budgeting may prevent you from missing payments on bills, which will help you build credit and strengthen your financial situation.

Monitor your credit report

Check your credit report carefully to ensure that all the information is accurate. Your total credit score may be negatively affected if your credit report contains inaccurate information. By comparing it with bank account statements and other financial data, you might be able to spot any errors on your credit report. If this occurs, you can contact a credit reporting agency or your creditor to ask for a revision. This may lead to an improvement in your credit score.

Use a debit card for payments

Your credit score suffers if you are unable to make timely payments on your accounts. Using a debit card may be a better approach to control overspending if you are having trouble paying off your debts.

How long do late payments stay on your credit report?

Everything depends on the kind of data. The credit report contains your name, birth date, gender, driver’s licence number, and previous addresses for the duration of its existence. The typical timeframes for additional information on your credit report are listed below.

  • Two years

Repayment history of up to 24 months may be retained for each credit account on your file.

  • Seven years

Significant credit infringements or violations. If you falsely applied for credit, stopped making payments and your creditor couldn’t reach you for more than six months, it is a serious credit infringement. Your credit report will include a significant credit violation for seven years.

  • Five years

    • Defaults. If your payment of $150 or more is late by 60 days or more, a default is noted on your credit report and can be retained for five years.
    • Enquiries. A credit enquiry is made on your credit file by the credit provider when you apply for a credit product. The frequency, date, kind of credit requested, and credit provider determines how inquiries affect your credit score. These are kept in your file for five years.
    • Court judgements. A court judgement is an order from the court requiring you to pay your credit provider what you owe them, any fees, penalties, and interest. The credit reporting agency will use public records to obtain information regarding court judgments. A court decision is recorded in your credit report for five years after the day it was rendered.
    • Bankruptcy. Your credit report or credit file will also include bankruptcy. Other bankruptcy details, such as debt agreements or personal insolvency arrangements, may also be included. These will stay on your credit record for a minimum of five years, and occasionally longer.

Who produces credit reports?

A credit bureau may provide a copy of your credit report upon request. It contains information about you personally as well as your financial situation, such as any credit or loan products you have used, your repayment history, credit or loan applications, and details about any bankruptcies, defaults, or court judgments in your name.

Equifax, Experian, and Illion are the three main credit reporting agencies in Australia. To obtain a copy of your credit report, you will need to provide identification information. For instance, you might be asked to submit copies of your Medicare card and driver’s licence.

Here is a comparison of the three credit score categories:

Credit band Equifax Experian Illion
Excellent 800 – 1000 833 – 1200 800 – 1000
Very Good 700 – 799 726 – 832 700 – 799
Good 625 – 699 622 – 725 500 – 699
Fair / Average 550 – 624 510 – 621 300 – 499
Weak / Below Average 0 – 549 0 – 509 1 – 129


Equifax groups account into open or closed groups, making it simple to compare recent versus past credit information. Additionally, Equifax offers a credit history that spans 81 months, or almost seven years.

Equifax divides a credit report into the following sections:

  • Revolving accounts, such as credit cards and department store charge cards
  • Mortgages
  • Instalment loans for personal and auto loans
  • Other accounts may include businesses hired to collect debts on creditors’ behalf
  • Consumer testimonials 
  • Identifying information, such as past addresses
  • Potential creditor inquiries
  • Public records, including bankruptcy records
  • Accounts charged off and given to collection firms because of nonpayment 


This credit bureau provides a timeline for how long a certain account will be reported to the credit history. Additionally, it provides a history of each account’s monthly balances. Because Experian tends to follow recent credit queries more carefully than Equifax, it has a minor advantage over Equifax.

The following sections are included in the breakdown of a credit report by Experian:

  • Personal data, including previous addresses
  • Employment
  • Accounts that contain loans, credit cards, and mortgages
  • Inquiries, including those made by creditors reviewing a report as a result of a recent application


Like the other two credit bureaus, Illion also collects and keeps credit history on individuals and businesses. Following the utilisation of this data, complex credit reports and ratings are produced and provided to prospective lenders. 

Your Illion credit report offers a variety of information regarding your personal credit history. What you can expect to see in your report is as follows:

  • Name, date of birth, gender, current address, name of your current or former employer, and driver’s licence
  • Hard credit checks that look at the types of credit you’ve previously applied for
  • Types of credit accounts you have, together with dates of opening and closing
  • The credit limit on each credit account as well as information about the credit providers
  • Your payments history, including any defaults, and the day you paid off the amount that was due in default
  • Information on court rulings involving credit you have been given

Reviewing your credit report and score has no impact on your credit score. But keep in mind that the creditor or lender will often check your credit report to establish your creditworthiness if you request credit or a loan, and this can harm your score.

The Bottom Line

The bottom line is that having a good credit score is crucial if you want to get loans or other financial items. In the long run, it can prevent you from taking out a personal loan that you might not be able to manage. It helps lenders decide whether or not you prioritise repayments. It’s also critical that you understand how credit ratings are determined. Credit reporting agencies provide information that creditors and lenders may use to help them make judgments about whether or not to give credit.

A good credit score can ultimately save you hundreds of dollars in interest and fees. However, it is your duty as the borrower to keep your credit in good standing so that, should the need arise, you may take advantage of further loan options.

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