12th October 2022

Credit Scores Explained

When you apply for a form of finance, whether it’s a car loan or credit card, your credit score will be an important factor in your application.Last modified: 24th July 2023
William Jolly |
Cropped image of man working on laptop and holding phone showing credit score.

In Australia, credit scores can range between zero and 1,000 to 1,200 depending on the credit reporting bureau. Each credit reporting agency has its own set of criteria when determining your credit, so your credit score can vary between them.

In this article, we will discuss what your credit score means, how it is calculated, and what it means for your future borrowing options.

In fact, most people will have a credit score, yet there are still so many misconceptions about them, and many people still might not know they have one or why it’s important. 

In this article, we’ll explain what your credit score is; what it means, and why you should always try to improve it.

On this page: 

What is a credit score?

A credit score, also known as a credit rating, is a score given to you based on your borrowing history from credit providers. When you apply for a credit product (such as a home loan, car loan or credit card), your credit score can essentially act as a numerical representation of your trustworthiness and reliability as a borrower. 

Generally ranging from 0 to 1,200, your credit score is an extremely important number and having a low one can make life harder in several ways. 

You can access your credit score online through an online credit score provider or view your score on your credit report, which is essentially a longer, more detailed document on your credit history. 

What is in a credit report?

Your credit report can include any of the following depending on your past and present financial behaviours:

  • Your personal information (name, date of birth, 100 points of ID etc.)
  • Your credit score 
  • Each credit product you’ve held in the last two years (the type, the provider, credit limits, opening and closing dates etc.)
  • Your repayment history (repayment amounts, due dates, any missed payments etc.)
  • Any financial hardship applications
  • Any applications for credit
  • Defaults on bills, bankruptcies and debt agreements 
  • Times you requested a copy of your credit report

As you’ll see below, you can receive different credit reports from different credit agencies. 

How is your credit score calculated?

There are several main credit reporting agencies in Australia, primarily Equifax, Experian, and illion. Each of these companies uses a different formula when calculating your credit score, but generally speaking, your credit score will be calculated based on the following factors:

  • Your repayment history: According to Experian, as much as 35% of your credit score is comprised of your repayment history, both good and bad
  • The type of lender you’ve applied with: some types of lenders - like payday lenders or wage advances - can be deemed riskier than traditional banks, so this can impact your score as well
  • Your number of recent credit applications: Applying for multiple credit and loan products in a short space of time can impact your credit rating
  • The amount of money you’ve borrowed
  • Any defaults, bankruptcies and court judgements
  • Regularly applying for balance transfers

And more. 

Depending on the credit agency, your score will be classed as a certain category. Here’s what these currently look like as of 2022. Note that each bureau has slightly different names for each band, so we’ve used Experian’s credit score range as a guide:




Below Average

0 - 505

0 - 549

0 - 299


506 - 665

550 - 624

300 - 499


666 - 755

625 - 699

500 - 699

Very good

756 - 840

700 - 799

700 - 799


841 - 1,200

800 - 1,000

800 - 1,000

What is a ‘good’ credit score?

A good credit score generally means you have a history of making repayments on time and being responsible with credit, or at the very least there is a lack of negative behaviours such as missing repayment deadlines. 

As you can see above, a ‘good’ credit score can be a broad term. For Equifax, a ‘good’ score is 666-755, a ‘very good’ score is 756 - 840, and an ‘excellent’ score is 841 - 1,200.

Illion, however, considers a good credit score to be anything above 500, while Experian is similar to Equifax as it requires at least 625 or higher to be considered a good credit score. 

Generally speaking, if your credit score is over 800, then you should be considered an excellent credit customer by most lenders. But your credit score is a dynamic number and can change at any time. 

What’s a ‘bad’ credit score?

Credit Bureaus tend not to use ‘bad’ to describe someone’s credit score. The lowest band, as seen above, is often called ‘low’ or ‘below average’. With illion your credit score must be less than 300 to be considered low; with Experian it’s under 550; under 505 with Equifax will put someone in the lowest credit rating category.

‘Bad’ credit scores can show lenders that you have a history of behaviours such as missing repayment deadlines or defaulting on loans, applying for too many credit products, taking out riskier loans like payday loans or wage advances etc. For this reason, they might deem you a riskier borrower and either approve you for a higher interest rate or deny the application.  

What is the average credit score?

The average credit in Australia is actually not that high: according to Finty, the average credit score across all states and territories as of 2022 is about 657, which would land someone firmly in the ‘average’ range. The ACT had the highest average score at 680, while the lowest belonged to Queensland at 641. 

So based on the credit score bands above, the average credit score in Australia is quite literally average!

Broken down by generation, you can also see that older generations tend to have higher credit scores:

  • Silent generation - 777
  • Baby boomers - 712
  • Gen X - 668
  • Gen Y (Millennials) - 630
  • Gen Z - 658

Why does your credit score matter? 

Your credit score is important because it’s essentially a representation to credit providers of your trustworthiness as a borrower and your responsibility with money. When you apply for a loan or credit product, lenders will likely use your credit score as a factor in assessing your application.

Having a bad credit score can limit your options in many ways. It could not only lower your chances of being approved for loans you apply for, but it could also exclude you from being eligible for certain loans. Most lenders typically have minimum credit criteria for their best products, and a lower credit score might limit you to a loan with higher interest rates and fees, less flexible loan terms and more. 

On the other hand, a higher credit score can improve your chances of a successful loan application for a desirable product that meets your needs, as your recent financial history suggests you’re likely to repay the loan on time. 

How to check your credit score and credit report

You can receive your credit score for free as regularly as you would like from Equifax, Experian, illion and Talefin, but also from smaller, third-party services like Credit Savvy and Tippla. Your credit report, however, is free for you to access every 3 months. Any more frequently and you could be charged a fee. 

It’s generally pretty easy to check your credit report and score online. All you need to do is make sure you can verify your identity (have your driver’s license handy) and provide other personal information if necessary. 

Though access to your credit score is typically instant, it may take several business days to receive your credit report online depending on who you apply with. 

How often should you check your credit score and report?

Though some people believe checking your credit score too often will lower it, Equifax rebuts this by saying checking your credit score on a regular basis will not harm it. They actually recommend checking it regularly to ensure all information is up to date. 

Want to know the other myths surrounding credit scores? We’ve taken the time to bust 9 credit score myths to help settle things once and for all. 

In terms of your credit report, ASIC states you have a right to request a free copy of your credit report every three months, although it recommends checking it at least once a year. Smaller online credit score providers might give you one as frequently as once a month!

It’s generally a good idea to follow ASIC’s advice and check your credit report once a year or so, but you can really check it whenever suits you. For example, you may want to check your credit report:

  • Before you apply for credit or loan product 
  • If you want to see how your improved credit behaviours are fixing your score
  • If you believe your personal details have been stolen
  • Or if you want to correct a mistake on your credit file

Top tips to improve your credit score

If your credit score is too low, there’s both good news and bad news. 

The good news is that you can improve your credit score. The bad news is there’s no quick fix: it takes a while to slowly move your credit score up to a higher band and into the ‘good’ range. While defaults and serious credit infringements can remain on your credit report for several years, there are steps you can take to demonstrate that you are a responsible borrower.

Here’s a quick summary of the top tips you can use to get your credit score to where you want it to be. You can check out our article on how to improve your credit score for a more detailed look into these steps.

  1. Prioritise making all of your credit and bill payments on time.
  2. Limit new credit applications where possible
  3. Consider lowering your credit card limits, as these can be assessed as potential debts by a lender
  4. Cancel other credit cards you no longer need or consolidate them into one easier-to-manage loan repayment
  5. Access a copy of your credit report annually from each of the credit reporting agencies to ensure all information is correct. If there’s anything incorrect on your credit report, you can contact the relevant credit reporting agency and have them amend this for free

Don't be frustrated if you don’t see immediate changes to your credit score, as it can take time for these positive behaviours to show up. But over time, following these steps should see a steady increase in your credit score. 

Did you know: At Jacaranda Finance, you can build your credit history with us by taking out a loan and making all your repayments on time. We can reward our existing customers with better loan terms in the future by demonstrating responsible repayment behaviours. 

Credit scores and Jacaranda Finance

At Jacaranda Finance, credit scores form just one part of our comprehensive loan assessment process. With our powerful in-house technology, we are able to take in your whole recent credit and banking history, not just your credit score. This means we look beyond just your credit score and will look at things like: 

This means that even if your credit isn’t perfect, you could still be approved for one of our personal loans or car loans. In fact, our minimum qualifying credit score is 300, meaning we could still consider you for a loan even if your credit score is lower than you'd like.

And the best part? We can do all of this in double-quick time - you can complete an application in just five minutes1 and hear back from us on the same day2, while we can transfer the money to your bank account in just 60-seconds if approved3!

What’s more, we don’t charge any fees for paying off your loan early, giving you the option to flexibly adjust your repayments to your needs.

If you want to learn more about how our loans might be right for you, check out our FAQs or speak to our friendly customer service team who are more than happy to chat. And if you’re ready to get started on your application, hit the Get Started button!

This article was originally published on 13 May 2021.

Written by - William Jolly

Content Manager
William is the Content Manager at Jacaranda Finance. He has worked as both a journalist and a media advisor at some of Australia's biggest financial comparison sites such as Canstar, Compare the Market and Savings.com.au, and is passionate about helping Australians find the right money solution for them.

You can get in touch with William via williamj@jacarandafinance.com.au.
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