6 facts about credit scores that most Australians don’t know
From what Australians think a good credit score should get you to the number of people that don't actually know what a credit score is.
We’re reader-supported and may be paid when you visit links to partner sites. We don’t compare all products in the market, but we’re working on it!
When we decided to offer free credit scores on finder.com.au, we wanted to find out what Australians thought about credit scores and how much they understood them. The answers surprised us. So, without further ado, here are some of the most unexpected things we learnt about Australians and their credit scores.
Want a better way to check your credit score?
Banks know your credit score, so why shouldn't you? The Finder app updates your score automatically each month and lets you know if it changes. Pop in your phone number below to get your download link.
More than two thirds of Australians think that you should be rewarded for having a good credit score.
If you have an excellent credit score, that is, a score in the top Experian score band, you will receive the same credit card and personal loan interest rates from traditional banks and lenders as someone with an average credit score. Don't think that's fair? Neither do 67% of Australians, according to a finder.com.au survey of 2,033 Aussies.
Risk-based pricing is alive and well in America where a good credit score can mean great rates and better products, but the uptake has been much slower in Australia. Currently, there are some personal loans that offer risk-based pricing and personal interest rates, but that could just be the start.
More than two thirds think that credit card debt can affect your credit score.
While credit card debt isn't a great thing to have, it can't negatively affect your credit score if you make your repayments on time. Your credit card limit is listed on your credit file, but not your balance. In the US, your credit card utilisation ratio, or the amount of credit card debt in relation to your credit card limit, is one of the five factors that affects how your credit score is calculated, which is why some Australians might think it would be the same here. As your balance isn't noted, only your credit card limit – among other aspects – can affect your credit score.
A surprising number of people don't know what a credit score is.
We asked people whether they knew what their credit score was and gave them options for why they did or didn't. For people that didn't know their score, 12.3% did not know their score because they did not know what a credit score was. If we look at the gender breakdown, 10% of males and 14% of females don't know what a credit score is. The generational breakdown shows that the worst offenders are baby boomers, with 15% not knowing what a credit score is, while 11% of gen X and 11% of gen Y also don't know.
Australians are pretty cluey about what an average credit score is.
When asked how they would rate an Equifax score of 500, more than two thirds of respondents (67.6%) answered correctly that this score was average. More females (71.1%) than males (64.3%) answered correctly and baby boomers (70.6%) beat out both gen X (67.5%) and gen Y (64.8%).
More than one third of Australians thought a pay rise would improve their credit score.
Don't get us wrong, pay rises are great. However, they will not improve your credit score. When we asked this question, 34% of Australians surveyed mistakenly believed that a pay rise would improve their credit score. Your income is not included in your credit file, only your employment history is.
Gen Y is the most concerned about their credit score affecting their ability to access credit.
While 1 in 4 Australians (33%) fear that their credit score could stop them from being approved for a loan or a credit card, this number differed greatly by generation. Gen Y is the most worried, with 40% expressing concern that their credit score might inhibit their access to credit. This number dropped below the national average to 31% for gen X and significantly lower to 11% for baby boomers.
More guides on Finder
Health Professionals Bank Credit Card
Get an introductory rate of 7.9% p.a. on purchases and balance transfers for 6 months and save with an ongoing $0 annual fee with the Health Professionals Bank Credit Card.
What is a credit score?
Find out what a credit score is and what it can do for you.
Financial Fitness Challenge Week 3: How to get the most out of a credit card
How to cut debt and make your credit card work for you.
Rejected out of hand: 1.5 million Aussies knocked back for a credit card
The fear of getting rejected for a credit card is real, according to Finder, Australia’s most visited comparison site.
Financial Fitness Challenge Week 2: Check and improve your credit score
Understand your credit score with the Finder Financial Fitness Challenge.
Credit card woes: Where do Aussies turn if they can’t pay off their plastic?
Only half of Australians who find themselves buried under out-of-control credit card debt could dig themselves out, according to Finder.
Planning your retirement? Here are 4 things you need to know about reverse mortgages
SPONSORED: A reverse mortgage could let you use some of your home equity to fund your retirement costs. Here's what you need to know.
Online divorce application
What you'll need to know before you submit your online divorce application.
Credit cards vs buy now pay later
Both buy now pay later plans and credit cards give you ways to pay off purchases over time – here's how they compare.
What is a good credit score?
From discounts to more competitive financial products, here are some perks you can look forward to if you have a good credit score.
Ask an Expert