Missed payments matter more than you think. Even a single late repayment can stay on your file for up to seven years.
Maxed-out credit limits can hurt you even if you pay on time. Your credit utilisation ratio (how much of your limit you use) is a key signal to lenders.
New credit applications can backfire. Every time you apply, a “hard enquiry” is recorded. Too many in a short time can suggest financial distress and pull your score down.
Your credit score isn’t just a number. It’s a financial fingerprint used by lenders to understand your borrowing behaviour and how reliably you meet your financial obligations.
And when you're applying for a home loan, that number can significantly affect not just your approval chances, but the loan terms you’re offered, including your interest rate.
In this comprehensive guide, we’ll unpack the key factors that shape your credit score in Australia, explore how banks and lenders interpret your report, and share practical strategies to protect or improve your score over time.
1. Payment history
Your repayment history is one of the most heavily weighted elements in your credit score.
Why it matters
Every time you pay a bill, whether it’s a mortgage, personal loan, credit card, or even a utility bill, it gets logged. If you pay on time, it shows you’re financially reliable. But if you miss payments, especially by more than 14 days, it can have lasting negative effects.
A missed repayment can remain on your credit file for up to seven years in Australia, even if you eventually pay off the balance. This is due to Comprehensive Credit Reporting (CCR), which allows lenders to see both the positive and negative aspects of your credit history.
“Late payments are one of the key triggers for a lower credit score. With Comprehensive Credit Reporting now in place, lenders can see not just if you’ve missed a payment, but how often and how recently.” - Jackie Laverty, Aussie Broker
What to do
Prioritise your repayments. Always pay at least the minimum amount by the due date.
Automate where possible. Set up direct debits or calendar reminders.
Seek help early. If you're struggling financially, contact your provider before missing a payment. Many lenders have hardship support available.
You might also be interested in: Benefits of consolidating personal debts
2. Credit utilisation ratio
Your credit utilisation ratio is how much of your available credit limit you’re using at any given time, particularly on revolving accounts like credit cards.
Why it matters
A high credit utilisation ratio can be a red flag for lenders. Even if you’ve never missed a repayment, consistently maxing out your credit cards suggests you might be financially overextended. Most lenders prefer to see your usage stay below 30% of your total available credit.
Example: If your combined credit card limit is $5,000, aim to keep your balance under $1,500 at any given time.
Many Australians are surprised to learn that lenders assess your credit card limit as an ongoing liability, not just your current balance.
What to do
Keep limits low. If you don’t need a $10,000 credit card limit, reduce it.
Avoid multiple cards. Having several cards, even unused ones, increases your total credit limit.
Pay down high balances. Focus on reducing what you owe as quickly as possible.
3. Length of credit history
The longer your credit accounts have been active, the better. A long credit history gives lenders more context to assess how you manage credit over time.
Why it matters
Older accounts, especially those in good standing, demonstrate consistency and responsibility. Someone who has managed a credit card well for 10 years will generally be seen as more trustworthy than someone with brand-new credit.
This is particularly important for self-employed borrowers, where documentation of financial behaviour over time is a key part of the assessment.
What to do
Keep old accounts open. Even if you no longer use a credit card regularly, it may be worth keeping it open to maintain your credit age, provided there are no annual fees.
Check your history. If you're self-employed, you can verify past financial records (including loans or repayments) through the MyGov ATO pre-fill service.
Be consistent. Don’t constantly open and close accounts. It shortens your average history.
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4. Mix of credit types
The diversity of your credit portfolio can also influence your score.
Why it matters
There are two main types of credit:
Revolving credit: Like credit cards where the amount borrowed varies from month to month.
Instalment credit: Loans with fixed repayments over time, like personal loans, car loans, and mortgages.
Having a mix of both types, and managing them well, can improve your credit score. It shows lenders that you’re capable of handling different financial commitments.
What to do
Don’t take on unnecessary debt just for diversity’s sake.
If you already have a variety of credit types, focus on managing them responsibly. on-time payments, low utilisation, and reducing balances.
You might also be interested in: 10 things that don’t affect your credit score
5. New credit applications
Every time you apply for credit, whether it's a new card, personal loan, or even some Buy Now Pay Later services, it results in a "hard enquiry".
Why it matters
Multiple hard enquiries in a short period can signal financial distress to lenders. It might look like you’re desperate for credit or unable to get approved elsewhere. This can negatively impact your score, particularly if those applications are unsuccessful.
Most Australian lenders assess the past 24 months of credit enquiries.
What to do
Limit applications. Don’t apply for multiple credit products at once.
Shop smart. Use comparison tools that offer “soft checks” or eligibility indicators that don’t affect your score.
Check your own report. This is a soft enquiry and won’t impact your score.
6. Public records and defaults
This category includes more serious financial setbacks that are listed on your credit report.
What it includes
Defaults: Unpaid debts over $150 that are 60+ days overdue.
Bankruptcies or debt agreements.
Court judgements or writs.
ATO garnishee notices.
Why it matters
These records show that you’ve failed to meet your debt obligations. They typically remain on your file for five to seven years and significantly impact your ability to borrow.
What to do
Act fast. If you’ve received notice of a default, contact the creditor and try to settle before it’s officially recorded.
Check for errors. If a default or public record appears in error, dispute it with the reporting agency.
Use Equifax or Experian. These are the two main credit bureaus in Australia for dispute resolution.
7. Recent activity and account closures
Sometimes, well-meaning financial decisions can have unintended effects on your score.
Why it matters
When you close an account, especially an old one, you reduce your average credit age. This could lower your score, particularly if that account had a long history of positive repayments. Closing accounts can also reduce your available credit, increasing your utilisation ratio.
What to do
Think twice before closing old cards. If there are no fees and you can keep them open without temptation to overspend, they may benefit your score.
Close new or unused accounts first. If you're reducing your number of accounts, start with the newest.
Plan account changes strategically. Especially before applying for a home loan.
How lenders interpret your score
Lenders don’t just look at your score, they look at the story behind it.
Credit score bands
Here’s how scores from Equifax, one of Australia’s leading credit agencies, are typically interpreted:
Score Range | Rating |
|---|---|
0–599 | Below average |
600–664 | Average |
665–719 | Good |
720–789 | Very good |
790–850 | Excellent |
Keep in mind that each lender may have its own criteria and tolerance levels. For example, some may decline applicants under 650, while others may approve borrowers in the “Average” band if the rest of their financials stack up well.
How Aussie Brokers help
When you work with an Aussie Broker, you get someone who understands how lenders assess credit scores. An Aussie Broker can:
Explain your credit file in simple terms
Help you identify any red flags
Suggest lenders with policies suited to your credit profile
Present your application as strongly as possible
"It’s not the end of the world if you have credit card debt. A broker can help you make the right choices now to set you up for success later." - Jackie Laverty, Aussie Broker
Top tips to boost your credit score
Here are a few simple but effective strategies:
Always pay bills on time | Set reminders or automate payments. |
Reduce your credit card limits | Lower limits = less perceived risk. |
Check your credit file regularly | Look for incorrect or outdated listings. |
Minimise new applications | Too many enquiries drag your score down. |
Prioritise high-interest debt | Free up cashflow and improve your DTI (debt-to-income) ratio. |
You might also be interested in: How to improve your credit score
Frequently asked questions
Can you find out what is impacting your credit score the most?
Yes. By ordering a copy of your credit report (free once a year from Equifax or Experian), you can see the specific accounts, defaults or enquiries affecting your score.
For a snapshot, use the Free Credit Score Check tool on Aussie’s website.
Do credit card applications affect your credit score?
Yes. Every time you apply, the lender performs a hard enquiry. This can lower your score, especially if you apply for multiple cards within a short period.
Does Afterpay, ZipPay, Klarna or PayPal Pay in 4 affect my credit score?
Some Buy Now, Pay Later (BNPL) providers now report repayment activity to credit bureaus. In addition, applying for these services can trigger a hard enquiry.
“Some lenders view BNPL as a sign of financial strain. Even enquiries can affect your score, so always check first.” - Jackie Laverty, Aussie Broker
Does debt consolidation hurt your credit?
Not necessarily. While applying for a consolidation loan will cause a short-term dip due to the enquiry, over time it can help improve your score if you manage it well and reduce your overall debt.
Does refinancing impact your credit score?
Yes. Refinancing triggers a new credit application. But if it leads to a more affordable repayment structure, your score can improve over time.
Does student debt impact your credit score?
HECS-HELP debt doesn’t show up on your credit report. However, it is factored into your borrowing power. Lenders consider your repayment obligations under the HELP scheme as part of your ongoing expenses.
Your credit score is more than just a number, it’s part of your financial story. And like any story, it can evolve. With the right knowledge and guidance, you can make smart decisions to protect and grow your score.
At Aussie, we’ve helped Australians understand their credit profiles for over 30 years. Whether you’re buying your first home, upgrading, or refinancing, our Brokers are here to help you make sense of your score and unlock your next opportunity.
Ready to get started?
Book a chat with an Aussie Broker today.