Australia has three main credit reporting bodies — Equifax, Experian and Illion — each of which assigns you a credit score based on your borrowing and repayment history. Australian lenders use these scores (and the detailed information behind them) as part of their credit assessment when you apply for a home loan. A strong credit score does not guarantee approval, but a poor one can significantly limit your options. Here is what you need to know.
How Credit Scoring Works in Australia
Australia uses a 'comprehensive credit reporting' (CCR) system since March 2020, meaning both positive and negative information is recorded on your credit file. Previously only negative information was reported. Now, lenders also report whether you make repayments on time, the types of credit accounts you hold, and your credit limits — giving a more complete picture of your borrowing behaviour.
Equifax scores range from 0 to 1,200; Experian from 0 to 1,000; Illion from 0 to 1,000. Higher is better. Most home loan lenders use one or two of these bureaus (often Equifax and/or Illion). You are entitled to one free credit report per year from each bureau — access these at Equifax (equifax.com.au), Experian (experian.com.au) and Illion (creditcheck.com.au).
| Score Range (Equifax) | Rating | Likelihood of Home Loan Approval |
|---|---|---|
| 833–1200 | Excellent | Strong position with most lenders |
| 726–832 | Very Good | Good position, competitive rates available |
| 622–725 | Good | Eligible for most standard products |
| 510–621 | Average | Some lenders may require explanation |
| 0–509 | Below Average | Limited options; specialist lenders may assist |
What Factors Affect Your Credit Score — Positively and Negatively
Positive factors that improve your credit score include: on-time repayments on credit cards, personal loans and home loans; a long credit history showing stable, responsible use; low credit utilisation (using less than 30% of your available credit limit); a limited number of credit applications in recent years. Negative factors include: missed or late payments; defaults (accounts unpaid for 60+ days); serious credit infringements; bankruptcy or Part IX debt agreements; a high number of credit enquiries in a short period.
Under CCR, lenders can see 24 months of repayment history. This means every on-time payment improves your file, and every missed payment (even by a few days) can be recorded. Setting up direct debits for minimum repayments on all credit accounts is the simplest way to prevent accidental missed payments from damaging your credit file.
Credit Enquiries Are Visible to All Lenders
Every credit application — whether approved or declined — creates an enquiry on your credit file visible to all lenders for five years. Multiple enquiries in a short period signal that you are seeking credit urgently, which reduces your score and can lead to caution from lenders. If you are comparing lenders, use a mortgage broker — the broker performs one enquiry on your behalf rather than you lodging multiple direct applications.
Practical Steps to Improve Your Credit Score Before Applying
Credit score improvement takes time — allow at least three to six months of consistent positive behaviour before applying for a home loan. The most effective steps are: set up direct debits for all credit repayments to avoid missed payments; reduce credit card balances below 30% of each card's limit; close credit accounts you no longer use (this reduces your total available credit, but eliminates the serviceability impact of unused limits); avoid applying for new credit in the six months before your home loan application; and check your credit report for errors — incorrect defaults or enquiries can be disputed with the credit bureau.
If you have a serious credit impairment (default, court judgment, bankruptcy), specialist lenders may still be able to assist — but rates and fees will be higher, and the loan structure will differ from mainstream products. Speak with a broker about your specific credit history and what options are available.
Frequently Asked Questions
About the Author
Sakib Manzoor
Senior Finance Wellness Expert
Sakib Manzoor is the founder of Secure Finance and brings extensive experience in Australian mortgage broking and financial wellness. Specialising in helping clients achieve their property finance goals through personalised strategies and expert guidance, Sakib is FBAA accredited and committed to providing clear, actionable advice. All content is written to meet Australian regulatory standards and is regularly updated to reflect current market conditions.