What your credit score means
What is a credit score?
Your credit score is a number between 0 and 1,000 that lenders use to decide whether to lend your money. It is calculated based on your financial situation and borrowing history.
The better your credit score, the more likely you are to be approved for a credit card, personal loan or home loan, which is why it's important to maintain a good credit score and monitor your credit report.
Your Finder credit score is provided by Experian, one of the 3 major credit rating bureaus in Australia. Depending on your score, you'll be given a credit rating ranging from "Below average" to "Excellent".
What your credit score means
Here's a breakdown of the different credit scores and how they could affect your ability to get a loan:
| Credit score rating | Why do you have this score? | What do lenders think? |
|---|---|---|
| Excellent (800–1000) | A credit score around 800 is very solid and shows you have built a strong credit history. You're likely to have been doing things like paying your bills on time, paying off loans and credit cards, and making sensible applications for credit and limiting your lines of credit. Financial institutions will offer you credit if it's within your ability to repay. | You'll likely be able to negotiate lower rates and better terms for borrowing than most. |
| Very Good (700–799) | This rating should also have no problem securing a loan if you have the ability to pay it off. | The same great rates as someone with an excellent score might not be on the table, but you'll still secure a reasonable deal. |
| Good (625-699) | An average score is nothing to sniff at and usually means you haven't made any large mistakes with your money, like defaults. | Securing a big loan will depend on the lender's specific criteria and other individual factors like your current employment and debts. |
| Fair (550-624) | If you fall into this category, you have some room for improvement. You likely haven't made any significant money mistakes but you might have missed a few smaller payments that are hanging around as defaults. | You're probably in a younger age bracket too, which lenders tend to view as riskier. |
| Below average (0–540) | This is in the territory of a low credit rating. People in this category often pay their bills late. Defaults will eventually be cleared from your record but that process can take up to 5 years, so start making some changes to improve your credit score. | This score means you'll struggle to land a big loan. |
How your credit score is calculated
Your credit score is calculated based on things like the type and number of loans and financial products you have applied for, your borrowing and repayment history, your previous credit limits, and the inquiries that have been made on your credit report.
In simple terms, you'll have a good credit score if you've always paid off your bills and loans on time, have not applied for too many credit products in the past (especially in a short period of time) and not borrowed more than you can afford to repay.
How to improve your credit score
There are a number of things you can do to improve your credit score or maintain a good score, including:
- Paying your bills and other debts on time
- Repaying existing loans
- Making sure your credit report is accurate
- Not applying for new credit all the time
For more information on how you can improve your credit score, check out this guide.
Using your credit score
If you have a Good credit score or higher, chances are you'll be eligible for most credit products. If you're interested in taking out a loan or credit card, you can use our Chance of Approval feature to see how likely you are to be approved for a specific loan or card before you apply.
If you have a Fair or Below Average credit score, it's worth spending some time on trying to improve your credit score. The higher you can get your score, the better your chance at getting a loan or credit card, and the more likely you are to receive a more competitive rate.
