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How credit scores actually work in Australia

There is no single Australian credit score. There are three bureaus, three scales, and a lender scorecard you never get to see. This is what sits on the file and how long it stays.

Edward Chan

Edward Chan

Head of Compliance and Broker Support

· 8 min read

Reference material laid out for study, standing in for the detail behind an Australian credit report

There is no single score

Australia has three credit reporting bodies: Equifax, Experian and illion. Each holds its own file on you, each is supplied by a different mix of credit providers, and each runs its own scoring model. The scales are not even the same length. Equifax scores to 1,200. Experian and illion score to 1,000.

So a number quoted by an app is one bureau’s view, on one scale, on the day it was pulled. It is not a national score, and it is not the number a lender is looking at when they assess you.

Credit reporting bodies
Three
Equifax scale
To 1,200
Experian and illion
To 1,000
Your own report
Free

What is actually on the file

Comprehensive credit reporting means the file carries positive information as well as negative. Here is the full set, and how long each part is held.

Information types on an Australian consumer credit file. Retention is set under the Privacy Act and the Credit Reporting Code; confirm current periods with the credit reporting body.
Information typeWhat it showsRetention
Identification informationName, date of birth, addresses, employerHeld while the file is active
Consumer credit liability informationEach credit account, its type, the credit limit, and the open and close datesTwo years after the account closes
Repayment history informationA monthly grade for each account showing whether the payment was made on timeTwo years
Financial hardship informationThat a hardship arrangement applied in a given monthTwelve months
Credit enquiriesEach application for credit, the provider, and the amount soughtFive years
DefaultsAn overdue amount above the statutory minimum, at least sixty days late, after the required noticesFive years from listing
Serious credit infringementsA provider’s belief that the borrower evaded the debtSeven years
Court judgmentsA judgment relating to creditFive years
Bankruptcy and insolvencyBankruptcy, debt agreements and personal insolvency agreementsFive years from the date, or two years from discharge, whichever is later

Two things are not on the file, and people are regularly surprised by both. Your income is not there. Neither is your savings balance or any account balance. Lenders get those from documents you supply, never from the bureau.

Repayment history is the part that moves

Repayment history information is the monthly heartbeat of the file. For every credit account, each month receives a grade: paid on time, or a band showing how far behind the payment fell. A payment made within the grace period, currently fourteen days after the due date, is still recorded as on time.

Two features of it matter more than the score itself.

  • Only holders of an Australian credit licence can supply and see repayment history. Banks, lenders and finance companies can. Telcos and utilities cannot. That is why a phone account leaves no positive record at all, and only ever appears on your file if it defaults.
  • It rolls. The oldest month drops off as a new one is added, so a bad stretch genuinely does age out of a two-year window. Six clean months is visible to an assessor. Twenty-four clean months is a different file altogether.

Who can put a good month on your file, and who can only ever put a bad one

A phone or power account is a one-way street. Ten years of paying it on time build nothing on your credit file, and one disputed final bill can leave the only entry that account will ever make. That asymmetry is why telco defaults turn up on otherwise clean files.

Reflects the credit reporting framework under the Privacy Act. Confirm current requirements with the credit reporting body.

View as a table
Banks and lendersTelcos and utilities
Holds an Australian credit licenceYesNo
Records a monthly repayment gradeYesNo
Paying on time builds a positive recordYesNo
Can see your repayment historyYesNo
Can list a default against youYesYes
A clock face marking steady time, standing in for a credit file that improves month by month rather than by effort
Repayment history rolls across a two-year window. A rough stretch drops off the back of it while clean months arrive at the front, which is why time and direct debits do more here than anything else.

This is the part of a credit file a borrower can most directly influence, and the fastest lever available before an application. Direct debits on every credit commitment, dated just after payday, remove almost all of the accidental damage.

Hardship information sits beside it

Since financial hardship information was introduced, a hardship arrangement with a credit provider is recorded alongside repayment history for twelve months. It shows that an arrangement applied in that month, either a temporary deferral or a variation to the terms of the contract.

The protection built into it matters. Credit reporting bodies are not permitted to use hardship information to reduce your credit score. What it does do is stay visible to a lender assessing an application during those twelve months, and an assessor will form a view about it.

Asking for hardship assistance

  • An arrangement is recorded beside repayment history for twelve months.
  • Credit reporting bodies are not permitted to use it to reduce your score.
  • The account keeps being reported under the terms of the arrangement.
  • It falls away on time, twelve months later, whatever else happens.

Missing the payments instead

  • Arrears grades are recorded against the account month after month.
  • Those grades sit on the file for two years and every assessor sees them.
  • If it runs on long enough, and the notices are sent, the account can be listed as a default.
  • A default is held for five years from the date it was listed, paid or not.

That is not a reason to avoid hardship assistance. Missing payments outright produces repayment history arrears, and if it runs long enough, a default. Both are worse and both last longer. If repayments are becoming unaffordable, contacting the provider is the better move. Where the underlying problem is a business that cannot trade its way out, that is a conversation for an accountant or a registered insolvency practitioner rather than a credit file question.

Lenders do not use the score you can see

The consumer-facing score is a summary a bureau publishes to you. A lender assessing your application generally runs its own scorecard, built on the raw file data plus everything on the application form: income, employment stability, the deposit and where it came from, the loan-to-value ratio, existing commitments, time at address, and the product being applied for.

Consumer score
The number a bureau publishes to you, on that bureau’s own scale, from the data it held on the day you asked for it.
Lender scorecard
The lender’s own model, built on the raw file data plus everything on your application form. You never see it, and no two lenders run the same one.
Comprehensive credit reporting
The regime that put positive information on the file alongside the negative, which is why payments made on time now count for something.
Credit enquiry
The record that you applied for credit. It shows the provider and the amount sought, and it never shows the outcome.

The score you can see is one input among several

The number an app shows you goes into a model built by the lender, weighted by the lender, and never shown to you. That is why a strong consumer score can be declined and a mediocre one approved on the same day, by two lenders reading the same file.

Scorecards are proprietary to each lender and are not published. Weightings differ between lenders and change.

View as a table
InOut
One bureau’s file, including the score you can seeA lender scorecard result you never see
Income and how stable the employment is
The deposit, and where it came from
The loan-to-value ratio
Every commitment you already hold

That is why two things happen that otherwise look contradictory.

  • A borrower with a high consumer score is declined, because the scorecard weighted something the consumer score never saw, such as a short employment tenure or a high ratio.
  • A borrower with a mediocre score is approved, because strong income, a large deposit and clean recent conduct outweighed an old blemish.

Treat the consumer score as a smoke alarm rather than a verdict. If it drops sharply, something changed on the file and it is worth looking at that week. If it is simply lower than you would like, the useful question is not how to lift the number but which underlying entry is producing it.

Enquiries, and the pattern they make

Every application for credit leaves an enquiry, held for five years. The enquiry records that you applied. It does not record whether you were approved or declined.

Because the outcome is invisible, assessors read the pattern instead. Four enquiries in six weeks with no new account opened reads as four declines, whether or not that is what happened. Enquiries also do not distinguish helpfully between careful rate shopping and genuine credit hunger.

  • Checking your own file is not an enquiry, and lenders do not see it.
  • A pre-approval is usually an enquiry. Ask, before you request one, whether the lender is running a full credit check.
  • Quotes from comparison sites can generate enquiries. Read what you are consenting to before you submit the form.
  • Where several enquiries were all part of one purchase, say so in writing with the application rather than leaving it to be interpreted.

Getting the file, and fixing what is wrong

  1. 01

    Order all three reports

    Direct from Equifax, Experian and illion. Free on a regular cycle, and free again after a refusal of credit or after a correction is made.

  2. 02

    Read the identification section first

    Wrong addresses and misspelt names are how another person’s information ends up merged into your file. Fix that before anything else.

  3. 03

    Check every account, enquiry and listing

    Against your own records. Dates, amounts, creditor names, and whether the account was ever yours.

  4. 04

    Ask for a correction in writing

    To the credit reporting body or to the provider that supplied the information. There is no fee, and you can approach either of them.

  5. 05

    Expect a response inside thirty days

    They must tell you the outcome and their reasons. If they need longer, they have to ask for your agreement.

  6. 06

    Escalate for free if you disagree

    The provider’s external dispute resolution scheme, or the privacy regulator. No paid service can do more than this, and none of them can remove an accurate listing.

A sequence of connected stages, standing in for the free correction process that runs from first request through to escalation
Each stage of this costs nothing and you can start it yourself. A paid service walks the same path and sends you an invoice at the end of it.

WeL’nd reads credit files every day and matches them to a panel of more than forty lenders. We do not repair credit, because no one can remove an accurate entry. Nothing on this page is credit advice or an offer of credit, and every application is subject to lender assessment.

FAQ

Questions people actually ask

If yours is not here, ask it. We would rather answer the awkward one early than have you find out later.

1300 015 267
What counts as a good credit score in Australia?
There is no single answer, because the three bureaus use different models and different scales. Each publishes its own band descriptions, so read the bands from the bureau that produced the number. More usefully, lenders rarely assess on the consumer score at all. They run their own scorecard on the file data plus your application.
How long does it take to improve a credit score?
Repayment history moves first, because it is graded monthly and holds two years. Six months of clean conduct is visible. Enquiries take five years to clear and defaults take five years from listing, so those improve with time rather than effort. The realistic plan is to stop adding entries and let the clock work.
Does checking my own credit score hurt it?
No. Accessing your own report is not a credit enquiry, it is not visible to lenders, and it has no effect on the score. Only applications for credit leave enquiries.
Do phone and electricity accounts affect my credit file?
Only in one direction. Telcos and utilities are not credit licensees, so they cannot report repayment history and you get no credit for paying them on time. They can list a default, and that default is treated like any other. A disputed final bill is the classic way an otherwise clean file picks one up.
Does closing a credit card help?
It can help a home loan assessment, because lenders count the full credit limit as a commitment whether or not you use it. Closing a card removes the limit and can lift borrowing capacity. The closed account itself stays on the file for two years, and closing a card does not remove any repayment history already recorded against it.
Can a hardship arrangement stop me getting a loan?
It cannot lower your credit score, because credit reporting bodies are not permitted to use hardship information that way. It is visible to a lender for twelve months, and an assessor may ask about it. Missing payments instead produces arrears and possibly a default, which are worse on both counts and last far longer.

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