How to understand your Equifax Score

Your credit report contains a summary of your financial history, and your credit score is a reflection of how reputable that history is. Equifax (formerly Veda) is the country's largest credit reporting bureau and scores you with its Equifax Score, a number between 0 and 1200. The guide below takes you through everything you need to know about this score, how it is calculated and how to know if your score is "good".

What's a good credit score?

In Australia, your Equifax Score (formerly VedaScore) will be a number between 0 and 1200. A "good" credit score is between 622 and 725, a "very good" score is between 726 and 832 and an "excellent" score falls between 833 & 1200.

What is an Equifax Score?

There are a number of different credit scoring systems used by credit bureaus. These scores factor in the information listed on your credit file and reflect your ability to repay credit. An Equifax score is calculated by Equifax, Australia’s largest credit bureau. Your score helps lenders assess your credit application when you apply for a loan or line of credit. Similar to a tool that ranks your risk, all credit information is used to predict the outcome of your loan within the next 12 months.

In addition to your Equifax Score, lenders will apply their own lending criteria. This is why you shouldn’t completely rely on your score as an indicator of whether you should apply for the credit or not.

The difference between good and bad credit

Understand your credit score

Your Equifax Score is displayed as a number and indicates the likelihood of an adverse event being recorded on your credit file in the next 12 months. An adverse event can be a range of "bad credit" listings such as a default, a bankruptcy or a court judgement.

The higher your Equifax Score, the less likely it is an adverse event will be recorded on your file and the less of a risk you will appear to lenders. The lower your credit score the riskier you will appear as a borrower. We've broken down the Equifax score bands and what they mean in more detail below:

• Below average to average (0-509). It's more likely an adverse event will be recorded on your file in the next 12 months. You are in the bottom 20% of Equifax's credit-active population.
• Average (510-621). This score suggests that it's likely that you will incur an adverse event in the next 12 months. Your score places you in the bottom 21-40% of the credit-active population.
• Good (622-725). Adverse events are less likely to be recorded for the next 12 months. You fall in the mid-range (41-60%) of Equifax's credit-active population.
• Very good (726-832). Unfavourable events are unlikely to be recorded in your credit file within the next 12 months. Your score places you in the second-highest percentile range of the credit-active population (61-80%)
• Excellent (833-1200). Adverse events are highly unlikely to happen within the next 12 months when compared to the average Australian. The odds of no adverse events occurring on your credit file in the next 12 months are five times better than the population average and you are in the top percentile range (81-100%).

How is your Equifax Score calculated?

Your credit score is calculated using the information on your credit report and there are a number of factors that take into account your risk as a borrower. These include:

• Type of credit provider. There may be different levels of risk when approaching different lenders. A non-traditional lender may have a different level of risk than a bank or credit union.
• The size of credit requested. Both the type and size of the loan or credit limit you’re requesting can affect your Equifax Score. Mortgages have a different level of risk compared to credit cards.
• The number of credit enquiries. Every time you apply for a credit product, the credit provider obtains a copy of your file and the application is noted. If you've shopped around for credit and applied at a number of places in one space of time, it flags you as a higher risk. The pattern of credit enquiries over time also affects the level of risk.
• Directorship information. If you’re a director or proprietor, it may impact your Equifax Score so it’s important to check both the individual and commercial sections of your credit file.
• Age of credit file. The date your credit file was created. A new file may indicate a different level of risk compared to an older file.
• Personal details. Your score will consider your age, length of employment and how long you’ve lived at your current address.
• Default information. Any personal or business credit such as overdue debts, serious credit infringements or clearouts could negatively affect your Equifax score.
• Court writs. Default judgements or court writs may convey you as an increased risk and negatively impact your score.

How to repair your credit

Frequently asked questions about your Equifax credit score

How can I improve my Equifax Score?

There are a number of ways to improve your credit score and it depends on what your current credit position is. However, limited your credit applications and making sure your repayments are on time will help improve your credit score. If you are able to, you can also consider cancelling or reducing the limit on your credit cards. Find out more ways to improve your credit score here.

How does my Equifax Score impact my credit application?

Your Equifax Score ranks the level of risk you are compared to the rest of Australia. It could be used to help credit providers assess your ability to pay the loan back and whether or not to approve your application.