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Generally speaking, a good credit score is 690 to 719 in the commonly used 300-850 credit score range.
Scores 720 and above are considered excellent, while scores 630 to 689 are considered fair. Scores below 630 fall into the bad credit range.
Lenders, like credit card companies and mortgage providers, have the authority to define “good credit” in their own ways when determining whether to grant you credit and how much interest to charge you.
In actuality, though, having a high credit score is what enables you to obtain the things you desire or need, like lower mortgage rates or instant access to new credit.
Have you ever wondered what constitutes a “good” credit score in Australia? If so, get ready to dive deep into the world of Australian credit scores as we reveal the mysteries and translate the jargon.
What’s the Deal with a Good Credit Score?
In Australia, a good credit score typically hovers around the 661 mark, but it’s not as simple as hitting that magic number. Different credit reporting agencies use slightly different scales, and what lenders consider “good” can vary.
Credit Score Ranges in Australia:
- Equifax: Excellent (853-1200), Very Good (735-852), Good (661-734), Average (460-660), Below Average (0-459)
- Experian: Excellent (800-1000), Very Good (700-799), Good (625-699), Fair (550-624), Low (300-499), Below Average (0-549)
- illion: Excellent (800-1000), Great (700-799), Good (500-699), Room for Improvement (300-499), Low (1-299)
But here’s the kicker: lenders have their own interpretations of “good.” For instance, ANZ Bank considers scores above 675 as good, while anything below is just “average.” This means a slight difference in your score could translate to a significant difference in interest rates.
What Does a Good Credit Score Mean for You?
A good credit score acts like a golden ticket in the financial world opening doors to better loan terms lower interest rates, and increased credit limits. It essentially tells lenders you’re a responsible borrower, making them more likely to trust you with their money.
Benefits of a Good Credit Score:
- Higher loan approvals: With a good score, you’re more likely to get the green light on loan applications.
- Lower interest rates: A good score can shave off significant percentages from your interest rates, saving you money in the long run.
- Higher credit limits: Lenders might be more generous with credit limits, giving you more financial flexibility.
- Faster debt repayment: Lower interest rates mean you can pay off your debts quicker, improving your financial health.
What if Your Score Isn’t So Stellar?
Don’t fret if your credit score isn’t shining as brightly as you’d like. There are ways to improve it, but it takes time and dedication.
Tips to Boost Your Credit Score:
- Pay your bills on time: This is the golden rule of credit score improvement. Late payments can seriously damage your score.
- Keep your credit utilization low: Don’t max out your credit cards. Aim to use less than 30% of your available credit.
- Check your credit report for errors: Mistakes happen, and they can negatively impact your score. Dispute any errors you find.
- Become an authorized user on a responsible account: This can help build your credit history without taking on new debt.
- Limit applying for new credit: Every time you apply for credit, a hard inquiry is placed on your report, which can temporarily lower your score.
Frequently Asked Questions
If you still have inquiries concerning the landscape of Australian credit scores, don’t worry—we’ve got you covered.
Q: What’s the average credit score in Australia?
A: The average Australian credit score sits at 855, according to Equifax.
Q: What’s the difference between a hard and soft credit check?
A: A hard credit check is conducted when you formally apply for credit, and it impacts your score. A soft credit check is less formal, like when you check your own score, and it doesn’t affect your score.
Q: What actions can hurt my credit score?
A: Late payments, applying for too much credit, and defaults can all negatively impact your score.
Q: How can I get a free copy of my credit report?
A: You can access your credit report for free once every three months from each of the three major credit reporting agencies: Equifax, Experian, and illion.
The Bottom Line
Understanding your credit score is crucial for navigating the financial landscape in Australia. By aiming for a good score and managing your credit responsibly, you can unlock a world of financial benefits and opportunities. Remember, it’s a marathon, not a sprint, so be patient and consistent in your efforts to build a healthy credit score.
Pay bills on time
Payment history has the largest impact of all the factors in your score. A late or missed payment can have a significant negative impact on your credit score and can remain on your credit report for up to seven years.
Keep credit accounts open
Keeping older accounts open helps your average age of accounts, which has a small influence on your score. Closing an account cuts into your overall credit limit, driving up your credit utilization. However, there are some compelling reasons to close an account, including high fees or poor service.