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A credit score is a number that is calculated by Credit Reporting Bodies using information from your credit file, at a particular point in time. This score itself is a measure of risk and aims to indicate to lenders the likelihood of a borrower experiencing an ‘adverse event’ (such as a default on a loan).
Your score, when used alongside other information, helps lenders like us to determine if you will be offered a loan and if you’re offered a loan - the amount and interest rate.
There are three Credit Reporting Bodies (CRB) in Australia and each would have a different score for you because each calculates their own score using their own formulas and information available to them at that time.
At Equifax, scores range from -200 to 1200, with 1200 being a stellar score. When calculating your score, the credit reporting body may look at data on your credit file such as:
- Your personal details (such as age and where you live)
- The type of credit providers you have used (e.g. bank or utility company)
- The amount of credit you have borrowed
- The number of credit applications and enquiries you have made
- Any unpaid or overdue loans or credit
- Any debt agreements or personal insolvency agreements relating to bankruptcy
- Your loan repayment history with some lenders
Your credit score is dynamic and changes over time as CRBs calculate your score based on the financial and personal information they have about you on your credit report at that point in time.
What to find out your credit scores? Click on this FAQ on how to find out your credit scores.
It’s also important to check that your credit file has the right information about you and it can also help you understand some of the information which may have been used to calculate that credit score. See this FAQ on how to obtain a copy of credit file.
If you’d like more information on credit scores and credit files in general, you can check out at these websites.