What Affects Your Credit Score in Australia? (2026 Guide)

Quick Answer: Your Australian credit score is primarily affected by: defaults and court judgements (biggest single negative impact), repayment history across all accounts (biggest ongoing factor under CCR since 2018), the number and recency of credit enquiries, credit utilisation, account age and mix, and any serious credit infringements or bankruptcy. Defaults listed in breach of the Privacy Act 1988 can be removed professionally, often producing 100–300 point improvements in 30–90 days.

Understanding what moves your credit score — up or down — is the first step to actually changing it. Most Australians assume their score is a mysterious black box. It isn't. The inputs are documented, the rules are public, and once you know them, the path forward becomes clear.

This guide breaks down every factor that affects your Australian credit score, how much weight each carries, what you can fix fast, and what takes time.

How Australia's Credit Scoring System Works

Three independent bureaus calculate your score — Equifax (0–1,200), Experian (0–1,000), and Illion (0–1,000). Each uses a proprietary model, but they draw on the same underlying types of information reported by lenders, telcos, utilities, and other credit providers.

Since 2018, Australia's Comprehensive Credit Reporting (CCR) regime means both positive and negative data flows into your file. Before CCR, only bad news made it onto your report. Now, 24 months of on-time repayment history is also visible — which is good news for anyone actively building their file back up.

The Factors That Affect Your Credit Score

1. Defaults and Court Judgements — Biggest Negative Impact

A default is listed when you fail to pay a debt of $150 or more, and the credit provider follows the required process under the Privacy Act 1988. A court judgement is listed when a creditor has enforced a debt through the courts. Both are major negative events.

A single default can reduce an Equifax score by 80–200 points at the time of listing. Multiple defaults compound dramatically — two or three defaults can push a score from the Average band to Below Average entirely. Defaults stay for 5 years; court judgements for 5 years; serious credit infringements for 7 years.

Critically — defaults can be removed before 5 years if they were listed unlawfully under the Privacy Act 1988. No Section 21D pre-listing notice, listing during an active dispute, or incorrect amounts are the most common grounds. This is where the biggest and fastest score improvements come from.

2. Repayment History — Biggest Ongoing Factor

Under CCR, every lender who participates in the regime reports your repayment behaviour monthly. Did you pay on time? Were you 30 days late? 60 days? This data covers the most recent 24 months across all participating accounts — credit cards, home loans, car loans, personal loans, utilities, and telcos.

Consistent on-time payment is now a positive force actively lifting your score, not just preventing damage. A single missed payment on an otherwise clean file can still drop your score by 50–100 points — so setting direct debits for every recurring account is non-negotiable.

3. Credit Enquiries — Cumulative Damage

Every formal credit application — loan, credit card, phone plan, utility connection — triggers a hard enquiry that appears on your file for 5 years. One or two enquiries over several years is completely normal and barely moves your score. Five or more in 12 months is a different story — it signals financial stress and actively reduces your score with each addition.

The trap many people fall into is applying for credit after being declined, then applying again at the next lender. Each rejection prompts another application, each application creates another enquiry, and the score drops further with every attempt. If you've had multiple recent rejections, stop applying. Fix the underlying issue first.

Credit enquiry removal is available where enquiries were made without your proper consent.

4. Credit Utilisation — Ongoing Stress Signal

Utilisation is how much of your available credit you're actually using. A credit card with a $10,000 limit that's carrying a $9,500 balance signals financial stress even if you pay it in full every month — the bureau records the balance at the reporting date, not after payment.

Keep utilisation below 30% across all revolving credit accounts where possible. If you have a card you rarely use but keep for the available limit, consider reducing the limit if you're not using it — a high limit with no balance can slightly help utilisation ratios on your other accounts.

5. Account Age and Mix

Older accounts with positive history contribute positively to your score. The average age of your credit accounts is a factor — closing a card you've had for 10 years shortens your average account age and can temporarily reduce your score. Close high-fee accounts first; keep older low-cost accounts open if they have positive history.

Having a mix of credit types — home loan, credit card, personal loan — is marginally positive compared to relying on a single product type. But don't apply for credit you don't need just to improve the mix; the enquiry cost outweighs the benefit.

6. Personal Information Accuracy

Errors in your personal information — wrong addresses, incorrect date of birth, or outdated employer details — can cause your file to be cross-contaminated with another person's data, or can cause legitimate accounts to not link correctly to your file. Always check the personal details section when reviewing your credit report.

Real Case Study: Sophie, Cairns — Score Dropped 190 Points From Four Enquiries in Six Weeks

Sophie, 29, a nurse from Cairns, had a clean Equifax score of 714 when she started looking for a personal loan to consolidate two credit cards. She applied to four lenders over six weeks after two rejections. Each application added a hard enquiry. By the fourth application her score had fallen to 524 — a 190-point drop driven entirely by enquiry accumulation.

The fourth lender also declined. Now she had a file that looked like someone desperately seeking credit, with no approvals to show for it.

During her ACS assessment, we found no defaults or other negative entries — the entire issue was the enquiry cluster. Three of the four lenders had been sourced through a comparison website that had run soft pre-qualification checks before passing her to lenders for hard enquiries. One of those hard enquiries had been run without her explicit consent for that specific lender — a breach of the Credit Reporting Code.

We challenged that enquiry and it was removed.

Result: Sophie's score recovered from 524 to 598 after the enquiry removal. More importantly, she stopped all new applications, addressed her utilisation by paying down one card, and over the following four months her score rebuilt to 681 through consistent on-time payments. She was then approved for the consolidation loan at a mainstream rate. Subject to individual assessment; results may vary.

What Helps vs What Hurts: Quick Reference

Frequently Asked Questions

What is the biggest factor affecting credit score in Australia? For most people, defaults and court judgements have the largest single impact — one default can reduce a score by 80–200 points instantly. For people without active negative entries, repayment history under CCR is the most influential ongoing factor, as 24 months of payment behaviour is now visible to all participating lenders.

Does applying for a credit card affect my credit score in Australia? Yes. Every formal credit card application creates a hard enquiry on your file, reducing your score by 5–30 points. The enquiry stays for 5 years. If you're declined and apply elsewhere, each new application adds another enquiry. Multiple enquiries in a short period signal financial stress and compound the score reduction.

Does paying off a credit card improve your credit score in Australia? Paying down a credit card balance reduces your utilisation ratio, which can positively affect your score — particularly if the card was close to its limit. On-time payment also contributes positively under CCR. The improvement isn't instant; it shows up in your score after the lender reports the updated balance, typically monthly.

Does closing a bank account affect credit score in Australia? Closing a basic bank account (a transaction or savings account that isn't a credit product) does not affect your credit score. Closing a credit card, overdraft, or line of credit does — it reduces your total available credit and shortens your average account age, both of which can temporarily reduce your score.

How many credit enquiries are too many in Australia? One to two hard enquiries over 12 months is considered normal. Three to four starts to raise flags with lenders. Five or more in 12 months is a significant negative signal and actively reduces your score with each addition. If you've had multiple recent applications, stop all new applications and address the underlying credit issue before trying again.

Can errors on my credit report lower my score in Australia? Yes — and this is more common than most people realise. Incorrect personal details, debts attributed to the wrong person, defaults listed in error, and expired entries that haven't been removed can all reduce your score without any real credit behaviour on your part. Checking all three bureau reports and challenging errors under the Privacy Act 1988 is the fastest way to address score damage caused by inaccurate data.

Know What's on Your File Before You Do Anything Else

Your credit score is only as accurate as the data behind it. A free assessment from Australian Credit Solutions reviews your file for unlawful entries, inaccuracies, and anything that can be challenged — giving you a clear picture of what can be improved now versus what takes time.

Australian Credit Solutions is ASIC-licensed (ACL 532003), lawyer-led by Principal Solicitor Elisa Rothschild, and has helped over 5,000 Australians understand and improve their credit files since 2014. No Win No Fee. 98% success rate on accepted cases.

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Australian Credit Solutions Pty Ltd holds Australian Credit Licence ACL 532003. Credit repair services are subject to individual assessment. Results may vary. This article provides general information only and does not constitute legal or financial advice.

Free credit reports: equifax.com.au | experian.com.au | creditreport.com.au

Related reading: How to Improve Your Credit Score → | Default Removal Services → | Credit Enquiry Removal →