Credit Scores Explained: What Lenders See and How to Improve Yours

The short answer

Your credit score is a snapshot of how you’ve managed credit in the past. Lenders use it, along with your full credit report, to judge how risky it is to lend to you.

A strong score can make approval smoother. A weaker one doesn’t have to stop you, but it does make choosing the right lender, and applying the right way, even more important.

How credit scores work in Australia

Australia has three main credit reporting bureaus. Each keeps its own report on you and calculates its own score, on its own scale:

Bureau	Score range
Equifax	0–1,200
Experian	0–1,000
illion	0–1,000

Because each bureau uses different data and formulas, your scores won’t match. What matters is which bureau your lender uses, and what’s on that report.

What’s on your credit report

• Credit enquiries: each time you apply for credit, such as a loan, credit card or phone plan.
• Repayment history: up to two years showing whether you paid your loans and cards on time each month.
• Credit accounts: your current and past credit products and their limits.
• Defaults: overdue debts of $150 or more, 60 or more days late, that a provider has listed. These stay on your report for five years, even once paid.
• Serious matters: court judgments, debt agreements and bankruptcy.

What hurts your score

• Late repayments: even small, occasional slips on a credit card or car loan show up in your repayment history.
• Defaults and serious matters: these have the biggest impact and stay on your report for years.
• Too many applications: several credit enquiries in a short time can suggest financial stress. Shopping around by applying to multiple lenders at once can backfire.
• High limits you don’t use: unused credit doesn’t always hurt your score, but it does reduce your borrowing power.

Example: Chris applies directly to three banks in two weeks to compare offers. Each application leaves an enquiry, and his score drops. A broker can compare lenders first and lodge just one application.

Myth: “A declined application leaves a black mark on your credit file.”

Your credit report doesn’t record whether an application was approved or declined. A decline counts only as one credit enquiry, the same as any other application. It’s not the end of the world.

That said, we’d rather get it right the first time. With over a decade of lending experience and stringent checks before we submit, we’re confident in our assessment and help maximise your chances of approval.

Lenders look beyond the score

Your credit score isn’t the only thing that matters. Each lender also runs its own internal scoring, looking at your full report, income, employment, deposit and more.

That’s why the same person can be approved by one lender and declined by another. Matching your credit profile to the right lender is a big part of what we do.

Impaired credit isn’t the end

A past default, late payments or a tough patch don’t automatically rule you out. Specialist lenders look at the story behind the report, such as a one-off medical bill or a separation, and what you’ve done since.

These loans usually come with a higher rate. But they can get you into the market, and once your credit history improves, you can often refinance to a sharper rate later.

Checking your credit

• We can check it for you: with your signed privacy consent, we can order your credit report. It’s a soft check that shouldn’t affect your score, and it lets us spot any issues and choose the right lender before an application is lodged.
• Check it yourself: you can request a free copy of your report from each bureau, generally every three months.
• Fix errors: if something is wrong, you can ask the bureau or credit provider to correct it, free of charge. You don’t need to pay a credit repair company to do this.

How to improve your score

• Pay on time, every time: set up direct debits so nothing slips.
• Limit new applications: avoid applying for new credit in the months before your home loan.
• Tidy up your credit: close cards you don’t use and reduce limits on the ones you keep.
• Deal with overdue debts early: contact the provider before an account becomes a default.
• Give it time: positive repayment history builds month by month, and older issues carry less weight as they age.

Not sure where your credit stands?

With your consent, we can run a soft credit check, review your report with you, and find the lender that best suits your credit profile, all before an application is lodged.

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General information only. This article does not consider your objectives, financial situation or needs and is not credit, financial or tax advice. Lender policies vary and change regularly. Examples are illustrative. Seek advice from a licensed credit adviser before acting. Insight Property Finance.