Credit score basics every Australian needs to know

Did you know that when you apply for a loan, credit card, bank account, or even a phone plan, the bank or provider checks your credit file first? It’s their way of seeing how you’ve handled money in the past, whether you pay bills on time, how much debt you already have, and how reliable you look as a borrower.

Here’s the thing – around three-quarters of Australians have never even looked at their own credit file.

Most people have heard of a credit score, but in Australia it’s not quite the same as what you see in American movies. There isn’t one magic number that rules your financial life. What we actually have is a credit report, a record of how you’ve managed credit and from that a few different companies create their own scores.

Let’s unpack what’s in that report, how to get a free copy, and what you can do to keep it in good shape.

Credit Report vs Credit Score

Australia doesn’t have one national credit score. Instead, there are three main credit reporting bodies: Equifax, Experian and illion. Each keeps its own version of your credit report and creates a score, usually between 0 and 1,200, based on the information it holds.

Your credit report is the detailed record – your payment history, debts, and applications. Your credit score is just a quick summary number.

Think of it like this – the report is the story, and the score is the headline.

What’s inside your Credit Report?

Your report gives lenders a snapshot of how you manage money. It includes things like:

• Repayment history – whether you pay loans, cards and bills on time (tracked for two years)

• Credit enquiries – every application for a loan, card, or buy-now-pay-later account

• Defaults – unpaid debts of $150 or more that are over 60 days late

• Open and closed accounts – what you’ve borrowed and your credit limits

• Personal details – your name, address, employer and date of birth

Banks, phone companies and even utility providers report this data. Lenders then use it to decide whether to approve your application and what rate to offer.

Why it matters

Your credit file affects more than just loan approvals. It can influence the credit limit you’re given, whether you’re approved for a rental property or new utility connection. A clean report means options, and options usually mean saving money.

How to check your credit report for free

You’re entitled to a free copy of your credit report every three months from each of the main agencies:

When you get your report, read it properly. Make sure all accounts belong to you, your details are correct, and there are no defaults or credit enquiries you don’t recognise. If something looks wrong, contact the credit provider or bureau. They’re legally required to investigate and fix any genuine mistakes, usually within 30 days.

What affects your score and how to improve it

Here’s what really matters:

• Payment history – always pay bills and loans on time, even small missed payments can hang around for years.

• How much credit you use – if you’ve got a $10,000 card limit, try to keep your balance below about $3,000.

• New credit applications – every time you apply for credit, it’s recorded. Too many applications close together can look like financial stress.

• Length of history – a long track record of consistent behaviour helps. Think twice before closing every old account.

• Defaults or court judgments – these stay on your report for up to five years and can seriously drag down your score.

In my experience, people improve their scores through steady habits, not tricks. Pay on time, borrow responsibly, and avoid jumping between new cards or loans too often.

Avoiding credit problems

• Set reminders or direct debits so you never miss payments

• Keep credit card balances low and pay them off in full each month if you can

• Be selective with applications – compare first, apply once

• Watch Buy-Now-Pay-Later accounts – missed instalments count against you

• Check your report regularly – once or twice a year is enough to catch issues early

If you already have a black mark

A poor record isn’t permanent, but it takes effort to fix. Start by getting reports from the agencies so you know the full story. If something’s wrong, contact the lender and the bureau, they must investigate. Catch up on overdue bills and, if you’ve been through illness or job loss, ask for a financial hardship flag to explain the context.

Then focus on good habits from here on. Pay everything on time, avoid new debt unless necessary, and let positive history build. Over time, the old marks fade and your report starts to recover.

The bottom line

Your credit report is your financial reputation, and it’s completely in your control.

Check it, understand it, and form a few solid habits: pay on time, stay within your limits, and keep an eye on what’s being recorded. Because when the time comes to buy that new car, refinance your mortgage, or even just switch phone plans, you’ll be glad you took a few minutes to stay on top of it.

Visit Martin at Financial Edge Group or Find a Planner near you!

The Money & Life website is operated by the Financial Advice Association (FAAA). The views expressed in this article are those of the author and not those of the FAAA. The FAAA does not endorse or otherwise assume responsibility for any financial product advice which may be contained in the article. Nor does it endorse or assume responsibility for the information.