Understanding Good Credit Score in Australia

If you’ve ever applied for a loan or credit in Australia, then you will have a credit score. But what is this exactly? And why does it matter? These are great questions, and here’s a brief summary to help you understand the details:
 
What is a credit score? 
Your credit score is a number between zero and 1000 (or sometimes 1200, depending on the credit reporting bodies), and lenders use this score or rating as one of the factors to decide whether to give you credit or a loan. The higher the score, the more likely it is that you’ll get approved.
 
It’s a good idea to check your credit report from time to time, to make sure that it is healthy, especially if you plan to apply for credit or a loan any time soon.
 
How is a credit score calculated? 
Your credit score is calculated using a variety of factors relating to your credit history, which are all summarised in your credit report. This typically includes details about: 

• Your repayment history for any loans or credit cards
• A summary of how much you have borrowed in the past
• An estimate of your ability to pay bills on time
• Any credit limits currently in place
• The number and frequency of credit applications you’ve made in the past
• Any bankruptcies, defaults or court judgments in your name

How do you view your credit report? 
There are a number of reputable agencies that offer credit reports and credit score summaries. The most popular ones in Australia are Equifax, Experian and Illion, and to get your report you’ll need to prove your identity using official documents such as your driver’s licence, passport or Medicare card.
 
It’s worth noting that these agencies sometimes offer slightly different scores to each other because different credit reporting bodies may hold different information about you. 
 
How do you interpret your credit score? 
Fortunately, it’s easy to understand your credit score as it is graded with simple categories: Excellent, Very good, Good, Average and Below average.

Credit Score Range	Illion	Equifax	Experian
Excellent	800 – 1000	833 – 1200	800 – 1000
Very good (Great*)	700 – 799	726 – 832	700 – 799
Average (Good*)	500 – 699	622 – 725	625 – 699
Fair (Room for Improvement*)	300 – 499	510 – 621	550 – 624
Low	0 – 299	0 – 509	0 – 549

  * This is illion's categorisation terminology

The higher your category, or score, the less risky you are considered to be as a borrower, and the more likely it is that you will be given a loan on better terms than otherwise.
 
A low score could mean that you will get a less favorable rate, or possibly even have loan applications rejected. But don’t panic if you have a low score! Your credit rating is not fixed forever and it is possible to improve your credit score.