What is a good credit score?

Investing, Uncategorized
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Some of the most common questions I get asked from clients relate to their Equifax score, or their credit rating.

Equifax is Australia’s largest credit reporting agency and allocates you with a number that is essentially a summary of your financial history.

It’s a way of measuring your history when it comes to engaging with lenders, credit card companies and utilities providers.

It’s used in a variety of financial situations to give a prospective lender an idea of your quality as a borrower. And it’s absolutely critical in the decision-making process.

How the score works

The Equifax score will be a number between zero and 1200. It’s calculated with data on your credit report and is based on a number of factors.

Credit Score

For starters, any issues you’ve had in the past with defaults, serious breaches of credit contracts, overdue debts and debt collection referrals will impact your score.

But other things can also have a negative effect.

If you make a number of enquiries for credit, this could be a red flag and impact your score accordingly. That is, if you’re constantly applying for credit cards – even if you don’t take up the offers – this will be recorded in your file.

Sometimes, those enquiries are innocent. I had a client once who loved to shop around for frequent flyer deals on credit cards, getting a new one and transferring balances whenever there was an incredible deal. But too many enquiries can hurt your score and make lenders nervous.


What’s a good score?

The higher your Equifax or credit score, the more likely you are to be considered a good candidate to lenders. A score of zero to 500 is below average and tells a lender that you’re at high risk of experiencing an adverse credit event in the next 12 months. A score of between 500 and 620 is average, between 620 and 725 is good, between 725 and 832 is very good and above that is excellent.


High credit scores show you have demonstrated responsible credit behaviour in the past, which may make prospective lenders and creditors more confident when evaluating your request for credit.

Generally speaking, a score of about 650 upwards is considered good to most lenders. Below that and you might face some challenges.

Different lenders have different criteria, and the type of credit you’re seeking also determines what type of score will be necessary. For example, a power company looking at your credit score will obviously have a different comfort level to a bank considering your mortgage application.

How can you improve a score?

There are some basic things you can do to begin improving your credit score.

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The obvious one is to always make payments on time and avoid incurring any penalties, late notices or referrals to collection agencies.

Another easy one to limit the number of credit enquiries you make, from credit cards to store interest-free loan deals or other types of charge cards. The less you’re sniffing around for credit, the better your score will get.

If your score is especially low, order a copy of your credit report and find out what high-risk listings are contained in it. These could be credit cards with exceptionally high limits, defaults and serious infringements.

Defaults usually remain a black mark for several years. But if there’s an error or a misunderstanding, you can apply to have it corrected.

If you have multiple loans and credit cards that are dragging down your score, you can consider consolidating them into one loan with a low or introductory interest rate to get on top of debt.

And if you have any overdue debts, prioritise paying them off as quickly as possible.

Discuss your specific needs & formulate the right strategy for you. Get in touch to organise your complimentary 60min session today!

The information provided in this article is general in nature and does not constitute personal financial advice. The information has been prepared without taking into account your personal objectives, financial situation or needs. Before acting on any information you should consider the appropriateness of the information with regard to your objectives, financial situation and needs.

Andrew Mirams

7 Comments. Leave new

  • Very informative. How many credit card application per year are ‘too many’? I am interested in the travel points and cash back rewards and would probably get a new credit card every 3 months. Would this negatively impact my credit score? Would cancelling the credit card after exploiting its benefits (so within a year) negatively impact the credit score too?

    • Andrew Mirams
      December 4, 2019 7:13 am

      Hi Alex,
      Some great questions you’ve posed here, let me answer each one individually.
      So in relation to “how many” would impact your credit score, this is really difficult to put a number on this because all the mechanisms that judge your score are automated and no-one knows the exact impacts. But what I would think is that if you were doing a credit card enquiry or new application every 3 months, then after the 3rd or 4th, I think this would impact negatively.
      With Open banking now though, getting the benefits then closing the card in the future may not impact your score. BUT (there’s always a but) you may also want to consider that credit card limits will also impact your future borrowing capacity as well, so you need to be mindful of this too.

  • Rahul Kumar
    July 14, 2020 9:41 pm

    Nice and very informative content i found in this articles that will helpful for the community so much. Thank you for sharing!!!!!!!!!!!!!!!!!!!!!!
    Great explain about credit score and how we can increase our credit score.

  • My Equifax score is 12 years old and is excellent, but my Experian is below average as it’s only a couple of years old. Do you know if most big banks look at both these scores for a mortgage?

    • Andrew Mirams
      November 6, 2020 7:31 am

      Hi Carly,
      Really good question. All the rating agencies have different tools that they use.
      The best one to understand your credit rating (it doesn’t give you a score but gives you full access to all credit you have) is equifax and you can get your own free report to understand your credit file.
      I hope this helps.

  • My Equifax score is 12 years old and is excellent, but my Experian is below average as it’s only a couple of years old. Do you know if most big banks look at both these scores for a mortgage?


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