A Credit Score, also called Equifax Score, is a number that is calculated based on the information in your credit report. It ranges between 0 to 1200, where a higher number means you are more likely to be able to repay the loan.
Equifax is the leading credit reporting agency in Australia and has credit information on 18 million Australians, and is used by most lenders and credit providers, to evaluate how responsible you are to lend to, and whether you have the endurance to pay them back.
Equifax Ranking
- EXCELLENT - 833-1200 - You’re in the top 20% of Equifax’s credit-active population, suggesting it’s HIGHLY UNLIKELY that an adverse event could harm your credit report in the next 12 months. Your odds of maintaining good loan conduct are 5 times better than the average population.
- VERY GOOD - 726-832 - Your Equifax Score suggests it's UNLIKELY that you will incur an adverse event in the next 12 months that could harm your credit report. Your odds of maintaining good loan conduct are 2 times better than average credit-active population.
- GOOD - 622-725 - Your Equifax Score suggests it's LESS LIKELY you will incur an adverse event that could harm your credit report in the next 12 months. Your odds of maintaining a good loan conduct are better than average population.
- AVERAGE - 510-621 - If your Equifax Score is between 510 to 621, your credit score range is Average. Your EquifaxScore would suggest it's LIKELY that you will incur an adverse event such as a default, bankruptcy or court judgment in the next 12 months.
- BELOW AVERAGE - 0-509 - If your credit score is Below Average, you're in the bottom 20% of Equifax's credit-active population, suggesting it's MORE LIKELY that you will incur an adverse event such as a default, bankruptcy or court judgment in the next 12 months.
What does it mean to you?
As a rule of thumb, you need to have a Credit Score not less than 622 in order for the lender to approve you a normal home loan, otherwise, you may need to pay a higher interest rate with non-conforming loans.
How can you improve your credit score?
The following are some tips that will help you improve your credit score:
- Avoid applying for loans and credit cards too often
- Use direct debit to make repayment for loans, credit card and other regular charges, such as council rate and utilities, to avoid late payment
- Catch up missed repayments as soon as possible
- Check your credit report once a year so that you can correct any mistakes early
What's next?
As a home loan applicant, we strongly suggest you request and review your Equifax credit report beforehand.
It'll give you an opportunity to correct the inaccuracies with the credit reporting body to avoid the unnecessary hiccups in the last minutes.
You can get the Free Equifax credit report by clicking HERE.
