CREDIT SCORE

Credit scores, also referred to as credit ratings, are a representation of an individual's creditworthiness, based on their credit history and financial behaviour. These scores are used by lenders, landlords, and other entities to assess the risk of lending money, renting property, or providing services to an individual.

Who uses credit score ratings?

Some credit reporting agencies give a score based on the use of credit, repayment history etc.

A credit score is a number, usually between 0 and 1000 (sometimes 1200) depending on the credit reporting agency.

Not all credit reporting agencies give an actual score, rather giving a credit rating such as ‘low’, ‘fair’, ‘good’, ‘very good’ or ‘excellent’.

Lenders use your credit score (credit rating) to decide what sort of risk you pose to the lender if they lend you money.

Knowing what your credit rating (score) is, can assist you to negotiate better deals or understand why a lender rejected you.

The better your credit score (rating), the less risk you present to the lender, and you stand a chance of getting better interest rates or terms and conditions related to credit that you might want to use. 
A low credit score (rating) may prevent you from having access to affordable credit or getting access to any credit. Credit is likely to be at a higher cost if you can get access. 

You can find out more information about credit scores and how this works by going to https://moneysmart.gov.au/managing-debt/credit-scores-and-credit-reports and https://www.creditsmart.org.au/know-your-credit-score/

Improve your credit score

If your credit score is low, there are steps you can take to help improve it.

You can:

  • Lower your credit card limit
  • Limit how many applications you make for credit
  • Pay your rent or mortgage on time
  • Pay your utility bills on time
  • Pay your credit card on time each month — either pay in full or pay more than the minimum repayment.

As you do these things, your credit score will start to improve. So you'll be more likely to be approved next time you apply for a loan or credit.

Frequently Asked Questions

1What is a credit score?
Some credit reporting agencies give you a credit score based on the information they have on your use of credit, repayment history and so on. A credit score is a number, usually between 0 and 1000 [sometimes 1200]. Not all credit reporting agencies give you a credit score, but may instead give you a credit rating such as ‘low’, ‘fair’, ‘good’, ‘very good’ or ‘excellent’.
2Why do I need to understand my credit score?
Businesses use your credit score (or credit rating) to decide what sort of risk you pose if they lend you money or offer you services on credit. Knowing what your credit score is and what it means, can assist you to negotiate better deals or understand why a business may have rejected you or offered you a loan at a higher interest rate than others.
1What happens if I have a low credit score?
A low credit score (or credit rating) may prevent you from having access to affordable credit or getting access to any credit. Credit is likely to be at a higher cost if you can get access.
2Why do I need to understand my credit score?
You can find out more information about credit scores and how this works on our website and by going to Moneysmart Credit Scores/Credit Reports and Credit Smart.

For more information

To gain a greater understanding on improving or updating your credit score or rating, here are some helpful resources you can access for more information:

Credit Smart

What is a good credit score?
VISIT PAGE

MoneySmart

Improving your credit score
VISIT PAGE
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