When is a credit score not the ‘right’ credit score?

Credit scores are becoming increasingly relevant to Aussies looking to get loans of any kind.

The reason is simple.

There is more information than ever before being fed into your credit file while lenders are beginning to use this information to personalise your interest rate for you.

Recent credit changes mean that both positive and negative information about your history with credit make it onto your file.

That means if you pay late, your file will essentially get a bad mark against it.

But if you continue to pay by the due date, your file will improve over time.

So what?

Here’s where it’s helpful to look behind the curtain at the three Credit Reporting Bodies (CRB) in Australia.

Each has a different Credit Score which is available through their public facing entities using their own formulas and information available to them at that time.

Your score also changes over time.

There are several websites that can provide you with your credit score for free.  Each of these sites will provide you with a different score, depending on the CRB they refer to.  These are listed below.

It is a good idea to also obtain a copy of your credit reports so you can better understand some of the information which may have been used to calculate that credit score

But yes, what does that mean?

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

What is my score?

Depending on the body, your score will likely be between between zero and 1,200 or zero and 1,000.

Most lenders will use this score, along with other data points, to see how risky it is to lend to you.

The catch here is that each use slightly different information. So while you may be highly rated with one, if another does not collect the same data, you might not be rated the same.

That’s why it’s important to know what your score is across the board to understand how different credit providers might see you.

If you log-in to an account, it’s likely you’ll be rated as one of the following:

Excellent – you are highly unlikely to have any adverse events harming your credit score in the next 12 months
Very good – you are unlikely to have an adverse event in the next 12 months
Good – you are less likely to experience an adverse event on your credit report in the next year
Average – you are likely to experience an adverse event in the next year
Below average – you are more likely to have an adverse event being listed on your credit report in the next year