How to understand your Experian score
What to know about your Experian credit score.
Up there with your income and your age, your credit score is one of the most important numbers you have in your life. It's a numerical representation of the information in your credit report and shows where you stand in terms of your finances. Your credit score from credit bureau Experian is a number between 0 and 1,000.
This guide will take you through what affects your score, what your Experian credit score means and a few ways to improve it.
What is your credit score?
Your credit score is a number from a credit bureau that sums up your credit position. It is calculated using the information on your credit report. Your Experian score is a number between 0 and 1,000; the higher the number, the better your score.
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What's a good Experian credit score?
Experian has five credit score bands that your score can fall into. These score grades range from "excellent" for scores that are closer to 1,000 down to "weak" for scores that are lower. Here is how the scores work:
- Excellent: 800-1,000
- Very good: 700-799
- Good: 625-699
- Fair: 550-624
- Weak: 0-549
What affects your Experian credit score?
Your Experian credit score is affected by anything that is listed on your Experian credit report. However, this information affects your score in different ways. For example, a credit report that has a long history may result in your credit score being higher than one with a shorter history.
Here are some credit activities and the effect they can have on your Experian credit score:
|Credit activity||Details||Increase or decrease credit score?|
|Defaulting on a credit account||When you fail to repay a credit account it's listed on your report for 5 years||Decrease|
|Negative data (such as defaults) removed from your credit report||Listings only appear on your report for a limited period of time||Increase|
|Multiple credit applications in a short space of time||Applying with several different lenders or for several different types of credit||Decrease|
|Repaying a default||Paying a default will update its status from "outstanding" to "paid"||Increase|
|Bankruptcies||If you are declared bankrupt||Decrease|
|Adding a new credit account||Opening a credit card or loan||Increase or decrease|
|Making repayments on time||2 years of your repayment information is listed on your report||Increase|
|Having excessive open credit accounts||All of your credit accounts are listed on your report||Decrease|
|Having too much unsecured credit||Too many credit cards or unsecured loans can appear risky||Decrease|
|Having a combined credit limit that's too high||The credit limits of all of your accounts are listed on your report but not what you owe on those accounts||Decrease|
How can I improve my Experian credit score?
If you've checked your Experian credit score and there is room for improvement, there are a number of things you can do.
- Make credit card and loan repayments on time. If you have a credit card or personal loan, make sure you are making repayments on time. Your ongoing repayments are listed on your credit report and on-time repayments can improve your score. Making additional repayments can also be a good option to consider because you will pay off your loan ahead of schedule, and your score will improve when the account closes.
- Space out credit enquiries. Every time you apply for credit it is listed on your credit report. It will be listed whether or not you are approved. To avoid these enquiries building up and negatively affecting your score, double check you are eligible for any product before you apply. If you aren't approved for your first choice you can still apply with an alternative lender, but don't make this a regular occurrence. A general rule is one application every six months won't negatively affect your score.
- Keep an eye on your credit report. Check everything on your credit report to make sure all of your information is correct. You may find a listing that hasn't been updated or something that is wrong which could improve your score.
- Make sure all your providers have your contact information. Many defaults occur because banks and lenders aren't able to contact their customers. Make sure you redirect mail if you move and check that all your banks and credit providers have your contact details.
- Consider consolidating your debt. As you can see from the table above, too much unsecured debt or excessive open credit accounts can decrease your credit score. If you are in this position you may want to look into your debt consolidation options. This can not only increase your credit score but also help reduce what you're paying in interest and fees.
- Check your credit score regularly. Your credit score gives you an idea of what your credit position is. By checking it monthly you can see if your behaviour is good or bad for your credit score.
Have more questions about your Experian credit score?
What is Experian?
Experian is one of the three credit bureaus in Australia that collect and provide credit data.
Why don't I have a credit score?
You may not have a credit score for a number of reasons. It may be because you have held no credit accounts in the past or no details from your credit accounts have been sent to Experian.
Why do I have a low credit score but no negative listings?
Your credit score is affected by a number of factors including how old your credit report is, the type of credit accounts you have and your activities with your credit accounts. While you may not have done anything that falls in the "bad credit" bracket, such as defaulting on an account or declaring bankrupt, there may be insufficient credit information to show you are a low-risk borrower, hence the low score.
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