Key Takeaway
Checking your own credit score is a soft enquiry. It has zero impact on your score. You can check it every single day if you want. The myths floating around about credit in Australia stop people from taking control of their finances, and that's exactly what this article is here to fix.
The Fear That Keeps You in the Dark
You're sitting at the kitchen table, phone in hand. You know you should check your credit score. Maybe you've been meaning to do it for months, or even years. But somewhere in the back of your mind, a voice whispers: "What if checking it makes it worse?"
So you put the phone down. You tell yourself you'll do it later. And another month passes where you have absolutely no idea what's sitting on your credit file. Maybe there are errors. Maybe there's a default you were never told about. But you don't look, because you heard that looking damages your score.
I see this every single week in my practice. People who've avoided their credit file for years because of a myth they picked up from a mate at a barbecue or a half-remembered article online. And it breaks my heart, because the information they're running from could actually set them free.
The Short Answer: No, Checking Your Own Score Does Not Lower It
Let me say this as clearly as I can. Checking your own credit score is what's called a soft enquiry. It does not appear on your credit file. Lenders cannot see it. It has absolutely zero impact on your credit score.
You could check your score every morning with your coffee and nothing would change. The credit reporting bodies in Australia – Equifax, Experian, and illion – all confirm this. Soft enquiries are invisible to anyone but you.
Under the Privacy Act 1988, you actually have the right to access your own credit information. It's your data. The system is designed so you can review it without penalty. The whole point is that consumers should be empowered to monitor their own financial position.
Soft Enquiries vs Hard Enquiries: The Difference That Matters
This is where the confusion starts, and where the myth gets its teeth. There are two types of credit enquiries in Australia, and they work very differently.
Soft Enquiries (No Impact)
A soft enquiry happens when:
- You check your own credit score through a free service or directly with a bureau
- An employer runs a background check as part of a hiring process
- A lender does a pre-qualification or pre-approval check without a formal application
- An existing credit provider reviews your account as part of routine management
Soft enquiries are not recorded on your credit file. Other lenders cannot see them. They have no effect on your score whatsoever.
Hard Enquiries (Can Affect Your Score)
A hard enquiry is recorded when:
- You formally apply for a credit card, personal loan, or home loan
- You apply for car finance at a dealership
- You apply for a phone plan on a contract
- A finance broker submits an application on your behalf
Hard enquiries stay on your credit file for five years. Each one can reduce your score, and multiple hard enquiries within a short period send a red flag to lenders. They start thinking you're desperate for credit or being knocked back elsewhere.
Expert Tip from Elisa
"Before you apply for any finance, check your credit file first. If you spot hard enquiries you didn't authorise – maybe from a car dealership visit where you only wanted a test drive – get in touch with us. Under the Privacy Act 1988, credit providers need your written consent before pulling your file. No consent? That enquiry may be eligible for removal."
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8 Credit Score Myths Busted
Misinformation about credit scoring is everywhere. Here are eight myths I hear constantly, and the truth behind each one.
Myth 1: Checking Your Credit Score Lowers It
Myth: "Every time you look at your credit score, it drops a few points."
Truth: Checking your own score is a soft enquiry with zero impact. You're entitled to access your credit information under the Privacy Act 1988. Check it as often as you like.
Myth 2: Carrying a Balance on Your Credit Card Builds Credit Faster
Myth: "You need to carry a small balance each month to show the bureaus you're using credit."
Truth: Paying your balance in full each month is the best thing you can do. Comprehensive Credit Reporting in Australia tracks your repayment behaviour. On-time, full payments build the strongest credit profile. Carrying a balance just costs you interest.
Myth 3: Closing Old Credit Cards Improves Your Score
Myth: "Getting rid of old cards you don't use shows lenders you're responsible."
Truth: Closing an old credit card can actually hurt your score. It reduces your total available credit, which increases your credit utilisation ratio. It can also shorten your credit history length. If the card has no annual fee, keeping it open and using it occasionally is usually the better move.
Myth 4: You Only Have One Credit Score
Myth: "There's one universal credit score that every lender uses."
Truth: In Australia, each of the three credit bureaus – Equifax, Experian, and illion – calculates your score differently using its own model. On top of that, many lenders use their own internal scoring systems. Your score can vary between bureaus, which is why checking all three matters.
Myth 5: Paying Off a Default Removes It From Your Credit File
Myth: "Once you pay off the debt, the default disappears."
Truth: Paying a default changes its status to "paid," but the listing remains on your credit file for five years from the date it was originally recorded. The only way to remove it early is to demonstrate that the credit provider failed to follow proper procedures under the Privacy Act 1988 or the National Credit Code.
Myth 6: Your Income Directly Affects Your Credit Score
Myth: "Earning more money means a higher credit score."
Truth: Your income does not appear on your credit file and has no direct influence on your credit score. Your score is based on credit behaviour – repayment history, defaults, enquiries, and the types of credit you hold. A person earning $50,000 with perfect repayment history will have a better score than someone on $200,000 with missed payments.
Myth 7: All Debt Is Bad for Your Credit
Myth: "Any debt on your file is dragging your score down."
Truth: Having credit accounts that you manage well actually helps your score. A home loan with consistent on-time payments, a credit card paid in full each month – these demonstrate responsible credit behaviour. Under Comprehensive Credit Reporting, positive repayment data is now recorded alongside negative information, rewarding good habits.
Myth 8: Credit Repair Is Illegal or a Scam
Myth: "Companies that say they can fix your credit are all dodgy."
Truth: Credit repair is completely legal in Australia. Licensed firms operate under the National Consumer Credit Protection Act 2009 and hold an Australian Credit Licence from ASIC. At Australian Credit Solutions (ACL 532003), we investigate whether credit providers followed the law when listing negative information. If they didn't, we have every right to request removal.
What Actually Affects Your Credit Score in Australia
Now that we've cleared the myths out of the way, let's talk about what genuinely moves the needle on your credit score. Understanding these factors puts you in control.
Repayment History
This is the single biggest factor. Under Comprehensive Credit Reporting, every monthly repayment on your credit accounts is recorded. On time? Your score benefits. Late or missed? It takes a hit. Even one missed payment can leave a mark for up to two years.
Defaults and Serious Credit Infringements
A default is listed when you're at least 60 days overdue on a payment of $150 or more and the credit provider has sent the required notices under the Privacy Act 1988. Defaults are one of the most damaging entries on a credit file and remain for five years.
Credit Enquiries
Every hard enquiry – every formal credit application – is recorded. Too many in a short period tells lenders you may be in financial trouble. This is especially relevant if you've been shopping around for car finance or credit cards without realising each application was being logged.
Credit Utilisation
How much of your available credit you're actually using matters. If you have a $10,000 credit card limit and you're consistently sitting at $9,000, that high utilisation ratio signals risk. Keeping it below 30% is generally recommended.
Length of Credit History
A longer track record of managing credit responsibly works in your favour. This is why closing your oldest credit account can backfire. Lenders like to see stability.
Types of Credit
Having a mix of credit types – a credit card, a home loan, a personal loan managed well – can be viewed positively. It shows you can handle different kinds of financial commitments.
Real Scenario: The Cost of Not Checking
I worked with a client last year – let's call her Sarah. She hadn't checked her credit file in over four years. She believed that looking at it would damage her score, so she left it alone.
When she finally came to us because a home loan application was knocked back, we pulled her credit file and found three problems she had no idea about. There was a default from a telco for $320 that she'd never been properly notified about. There were two hard enquiries from a car dealership she'd visited two years earlier – she'd only gone in for a test drive and never applied for finance.
Because the telco hadn't followed correct default notice procedures under the Privacy Act 1988, we were able to have that default removed. The car dealership enquiries were made without her written consent, so we had those removed too. Within six weeks, her score had improved significantly, and she reapplied for her home loan successfully.
The Lesson
If Sarah had checked her credit file even once during those four years, she could have caught those errors early and avoided the home loan rejection altogether. Avoiding your credit file doesn't protect you. It just means problems fester in the dark.
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What To Do Next
If you've been avoiding your credit file, today is the day to change that. Here's a simple plan.
- Check your credit score today. Request a free copy of your credit report from Equifax, Experian, and illion. Remember – this is a soft enquiry. It will not affect your score.
- Review every listing carefully. Look for defaults you weren't notified about, enquiries you didn't authorise, and personal details that are incorrect.
- Get a professional review. If you spot anything that doesn't look right, or if you're not sure what you're looking at, request a free credit report analysis from our team. We'll tell you exactly what can be challenged and what your options are.
- Set up regular monitoring. Check your score at least once every three months. If you're planning a major finance application, check monthly in the lead-up.
- Stop letting myths hold you back. You now know the facts. Share them with someone who needs to hear them.
Your credit file is not something to be afraid of. It's information. And information is power – especially when you know your rights under the Privacy Act 1988 and have a qualified team ready to fight for you.
If you need help understanding what's on your file, or if you've found listings that shouldn't be there, explore our credit enquiry removal service or book a free assessment today. At Australian Credit Solutions, we're ASIC Licensed (ACL 532003) and we've been recognised as industry leaders for our results.
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Elisa Rothschild
(BA/LLB)Principal Solicitor & Director
With over 12 years of experience in credit law, Elisa has helped thousands of Australians remove unfair credit listings and rebuild their financial futures. She leads Australian Credit Solutions' legal team with a focus on consumer advocacy and regulatory compliance.
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