What Affects a Credit Score?

Online Loans

January 8, 2021

A credit score is crucial for anyone applying for credit in Australia.

Car loans, personal loans, credit cards, home loans, cash loans and other forms of credit – all take a credit score into consideration.

  • If you’re over 18 and have ever applied for any form of credit, including a ‘buy now, pay later’ plan, store finance or phone plan, you should have a credit report and a credit score.

We covered how to improve your credit score before but here, we’ll look at what actually affects it and how long those effects can last.

Key Points:
Firstly, some common questions
What is a credit score?

A credit score is literally a score from 0 to 1,200 which rates a person’s history of managing credit and repaying loans. In a nutshell, the higher the score, the more reliable you are with credit repayments. High-income earners don’t necessarily have a high score.

Credit scores are located within a credit report (aka a credit file).

Who exactly gives credit scores and edits credit reports?

Finance companies. This can include banks, non-traditional lenders and phone contract providers. Any registered credit provider.

These companies will send financial history and records to credit reporting agencies, like Equifax when people formally apply for credit.

For example, you go to a bank to apply for a home loan. The bank will send a record of your application (eg: date, amount, etc.) to a reporting agency that records that information on your credit report.

How do I see my credit score and credit report?

You can see it all for free. Reporting agencies in Australia are required to send you a free copy of your credit file within 10 days if you haven’t ordered a copy in the previous 12 months.

Ordering multiple reports within a short period of time or requesting one sooner than 10 days can incur costs.

So, what’s a good score?

Below are the common score bands and what they mean:

Below average to average (0-509) – You’re likely to record something negative on your credit report in the next year, like miss a payment for example.

Average (510-621) – It’s possible you’ll record something negative.

Good (622-725) – It’s less likely that you’ll record anything negative on your credit report.

Very good (726-832) – You’re unlikely to record anything negative.

Excellent (833-1200) – You’re highly unlikely to record anything negative, delay or miss any repayments. This range indicates you’re much more reliable in paying back credit than other score bands.

Some Common Things That Can Affect Credit Scores

This is an overdue payment. Defaults are classed as equal to or more than $150 and more than 60 days overdue.

Example: A power bill that’s more than $150 and was due over 60 days ago.

Time on credit file: Up to five years even if you pay it off.

Credit Enquiry

A credit enquiry is a formal application for credit. These are recorded regardless of whether you’re approved or not.

They often don’t have a large effect on your credit score – especially if it’s a one-off and 12 months have passed.

Example: You apply for a credit card.

Time on credit file: Up to five years.

Repayment History

Monthly payments are recorded on your credit report. It shows if you meet your minimum repayments each month and whether they’re late. If you make your repayments on time, it’s recorded and reflects a positive credit history.

Example: You make 24 loan repayments over the last 24 months. 23 are on time and 1 was paid late (after a 14 day grace period) – this is all recorded.

Time on credit file: Up to two years.


These are based on a case-by-case basis but generally, they are recorded on credit files. They can result from consumer or commercial credit. There are many different forms of bankruptcies that have different circumstances.

Example: You are unable to repay a large debt and stop repayments for a long time.

Time on credit file: Up to 5 years from the date you became bankrupt or 2 years from when your bankruptcy ends.

Credit Scores Overall

Credit reports play a big role in making your dream car happen and can be one of many considerations before getting a car loan.

Improving your credit score is easier than you may think, as is avoiding a bad one. As mentioned above, you’ll generate a credit report for a huge array of situations. When you’re ready, you can submit your car loan application to OnlineLoans and we can help you get on the road in no time.

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