Your credit score is an important part of your financial situation, which is not always easy to understand. 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 is used by lending institutions to determine your creditworthiness, whether they are interested in lending to you.
Credit score scores range from zero to 1,200, and depict a person’s ability to repay borrowed credit, such as a loan. The higher your score, the better your credit rating and the more credit-worthy financial institutions consider you to be.
What Is a Good Credit Score in Australia?
A good credit score means lenders are more likely to approve your application for credit or loans. In some cases, it can also have a positive impact on how much they will lend you, the interest rate they charge and other credit or loan terms.
Generally, a very good credit score in Australia is over 700. Your score varies between 0 and 1,000 or 0 and 1,200 depending on the credit bureau. In general, the higher the score, the better your creditworthiness. Here’s a breakdown of what the three major credit score providers (Equifax, Experian, and Illion) consider a good credit score rating.
Stick with this article and find out what constitutes as a good credit score in Australia.
|Low||0 – 509||0– 549||1– 299|
|Fair||510 – 621||550– 624||300– 499|
|Average||622 – 725||625– 699||500– 699|
|Very Good||726 – 832||700– 799||700– 799|
|Excellent||833 – 1,200||800– 1,000||800– 1,000|
What is the average credit score in Australia?
An average credit score in Australia is between 500 and 700, again depending on the company. You are eligible for loans within this range, albeit you might not be able to acquire the best interest rates.
Recent research into average credit scores by age in Australia found that men over 60 had the highest average scores (
788.3). Women between the ages of 21 and 30 have the lowest average credit scores (671.7) which is not surprising given how female workers are being paid less than their male counterparts.
What is a bad credit score?
Having a bad credit score can mean that some lenders will be reluctant to give you a loan or credit product, depending on the type of loan, they may charge you a higher interest rate than someone with a good credit score.
A bad credit score in Australia can be anything below 500. If you fall into this category then there is no reason to worry. There are still things you can do to improve a bad credit score. It may take some time, but it’s worth the effort.
A few things can negatively drop your credit score:
- Missing or late payments.
- Recently applied for a new loan, mortgage or credit card.
- Increased use of credit.
- Close a credit card.
- Credit limit reduction.
Why Is Good Credit Score Important?
A good score is a way to show lenders that you’re in control of your finances. A credit score is used to determine whether or not you will make repayments on time. Good credit can be the make-or-break detail that determines whether you get a mortgage, car loan or student loan.
If you have a good credit score, it will be easier to:
- Qualify for Lower Credit Card Interest
- Get Approved for Higher Credit Limits
- Be approved for rental properties more quickly and easily.
- Get Utility Services More Easily
- Secure a mortgage
- Borrow more money from lenders
How Is Your Credit Score Calculated?
Your credit score rating is calculated by credit reporting agencies using a variety of factors, some of the most common ones being:
- The amount of money you have borrowed in the past.
- Your repayment history i.e. ability to pay bills and repay debts.
- The number of credit applications you have made in the past.
- Your personal details, such as your age, your current job and your address.
- Negative information such as bankruptcy, debt default or court proceedings in your name
- The length of your credit history.
How to improve your credit score?
No matter what your current credit score is, you can improve it if you want. You can improve your credit score with a few simple steps. These positive changes affect your credit score.
– Check your credit report for errors and dispute any errors.
– Make all your payments on time, including utility bills and rent payments.
– Keep your balances on credit cards and other revolving accounts low.
– Pay off debt without moving around.
Does Credit Score Matter in Australia?
Credit score is very important in Australia. A good credit score is essential because it allows you to show lenders that you are a responsible borrower and able to repay the loan on time. On the other hand, a low credit score can lead to higher interest rates and prevent you from being approved for a loan. The higher the score, the more likely you are to get approved.
What is the average credit score in Australia?
The average credit score in Australia is 673, but it varies depending on your gender and age.
What is a normal credit score in Australia?
If your credit report shows a score between 1,200, as a rule of thumb a score above 853 is excellent and above 661 is good. If your credit report shows a score out of 1,000, above 690 is excellent and above 540 is good.
What is a good acceptable credit score?
Each credit reporting agency has a different calculation system so what would be considered an excellent or good credit rating depends on which provider you look at.