Why Is My Credit Score Low in Australia? (And How to Fix It)

Quick Answer: A low credit score in Australia is typically caused by one or more of: defaults or court judgements on the file, a cluster of credit enquiries from multiple applications, missed or late payments recorded under CCR, high credit card utilisation, or errors and unlawfully listed entries. The fastest fixes are challenging unlawful entries under the Privacy Act 1988 (30–90 days, +100–300 points) and reducing credit card utilisation (shows up within one monthly reporting cycle).

Checking your credit score and finding it low is unsettling — especially if you're not sure why. Maybe you've had a difficult financial period and you know what put it there. Maybe it's lower than you expected and you can't work out the reason. Either way, the first step is the same: understand exactly what's on your file and why each item is there.

This guide covers every reason a credit score can be low in Australia, how serious each one is, and what you can actually do about it.

Reason 1: A Default on Your File (Most Common, Most Damaging)

A default — a formal record of an unpaid debt of $150 or more — is the most damaging single entry on most Australian credit files. It typically reduces an Equifax score by 80–200 points at listing and signals to almost every mainstream lender that you represent elevated repayment risk.

What you can do: Check whether the default was listed in breach of the Privacy Act 1988. The most common breach is the failure to issue a Section 21D pre-listing notice — a written warning at least 30 days before listing. Other grounds include listing during an active dispute (breach of Credit Reporting Code), an incorrect amount, or a statute-barred debt. If any ground exists, default removal services through ACS can typically resolve the challenge in 30–90 days.

Reason 2: Too Many Credit Enquiries

Every formal credit application — loan, credit card, phone plan — creates a hard enquiry on your file that stays for 5 years. One or two is normal. Five or more in 12 months is a significant red flag for lenders and actively reduces your score with each addition.

What you can do: Stop all new applications immediately. Then review your enquiries — any made without your explicit consent for that specific application can be challenged under the Credit Reporting Code and removed. See credit enquiry removal for the process. Legitimate enquiries from applications you genuinely submitted cannot be removed early but will age out over 5 years.

Reason 3: Missed or Late Payments Under CCR

Since 2018, Australia's Comprehensive Credit Reporting regime means lenders record your monthly repayment behaviour across all accounts. Every month you miss a payment on a credit card, loan, or participating utility account, it's recorded on your file. A single missed payment can drop your score by 50–100 points.

What you can do: Get all current accounts back on track immediately. Set direct debits for every recurring payment so nothing slips. Under CCR, positive behaviour also gets recorded — 12 months of on-time payments after a difficult period actively rebuilds your score. If any missed payment was recorded in error (you paid on time but it was mis-reported), challenge it directly with the credit provider and bureau under the Privacy Act 1988.

Reason 4: High Credit Card Utilisation

Credit utilisation — how much of your available credit you're actually using — is a real score factor. Using 90% of a $10,000 card limit signals financial stress to the bureau's model, even if you pay it off every month. Bureaus record the balance at the reporting date, not after you clear it.

What you can do: Pay down balances and keep utilisation below 30% across all revolving credit accounts. This improvement shows up in your score at the next monthly reporting cycle — typically within 30–60 days of the balance being reported. This is one of the fastest ways to improve a score without any formal challenge process.

Reason 5: Errors or Unlawfully Listed Entries

A surprising number of low credit scores in Australia are caused — at least in part — by information that is simply wrong. Debts attributed to the wrong person, defaults listed without proper notice, expired entries that haven't been removed, or accounts with incorrect balances can all drag down a score that should be higher.

What you can do: Get your full credit report from Equifax, Experian, and Illion and read every entry carefully. Anything you don't recognise, anything that appears to be in error, or any default you weren't properly notified about should be investigated and challenged under the Privacy Act 1988.

Reason 6: No Credit History

If your score is low because your file is thin — very few accounts, limited history, few positive data points — the issue isn't damage, it's absence. Lenders are uncertain about borrowers with no track record.

What you can do: Build history deliberately. A low-limit credit card used regularly and paid in full each month generates monthly positive CCR data. A small personal loan with consistent repayments does the same. Keep new applications minimal to avoid enquiry buildup. Within 12–18 months of consistent positive behaviour, a thin file typically develops enough history for mainstream lending consideration.

Reason 7: Bankruptcy or Part IX Debt Agreement

Formal insolvency arrangements are the most severe credit file events. Bankruptcy stays for 5–7 years and signals to most mainstream lenders that the applicant represents unacceptable risk during the listing period.

What you can do: While listed, your options are limited to specialist lenders who specifically work with post-insolvency applicants. Focus on rebuilding as described above. Some non-conforming lenders will consider applications 2–3 years after bankruptcy discharge with strong income and clean post-discharge repayment history.

The Fix Hierarchy: Fastest to Slowest

Take Action in This Order

1. Get your free credit reports from Equifax and Illion
2. Identify any defaults and check if they were listed with proper Section 21D notice
3. Challenge any unlawfully listed defaults — this is the fastest fix
4. Remove any unauthorised enquiries under the Privacy Act 1988
5. Correct any errors on your personal information or account details
6. Reduce credit card utilisation below 30% immediately
7. Set direct debits for all accounts — zero missed payments going forward

Real Case Study: Raj, Adelaide — Four Separate Issues, One Assessment

Raj, 36, a software developer from Adelaide, had a credit score of 412 and no clear idea why. He'd checked the number but never actually read his full credit report. When ACS reviewed his Equifax file, we found four separate contributing factors: a $640 default from a real estate agent (bond dispute); three hard enquiries from a broker who'd run searches without individual consent; a credit card listed at 94% utilisation; and a missed payment recorded two years ago on a personal loan that he had records showing was paid on time.

Four issues — four solutions available simultaneously.

We challenged the default (listed during an open dispute — Credit Reporting Code breach), challenged the three unauthorised enquiries, challenged the incorrect missed payment recording, and advised Raj to pay down the credit card immediately. Everything was actioned in parallel.

Default removed: day 36. Enquiries removed: days 18–24. Missed payment corrected: day 22. Card utilisation reduced: Raj paid it down to 18% within 2 weeks.

Result: Raj's Equifax score moved from 412 to 703 in 44 days — a 291-point improvement from addressing four separate issues simultaneously. He applied for a personal loan at a mainstream rate and was approved at 10.9% p.a. compared to the 28.5% specialist rate he'd been quoted at score 412. On a $40,000 loan over 5 years, the interest saving was approximately $17,800. He only paid when we succeeded. Subject to individual assessment; results may vary.

Frequently Asked Questions

Why did my credit score drop suddenly in Australia? Sudden drops are typically caused by: a new default being listed (−80 to −200 points), a new hard enquiry from a credit application (−5 to −30 points), a missed payment recorded under CCR (−50 to −100 points), or a significant increase in credit card utilisation. If you haven't applied for credit recently or missed any payments, check your report for a default listing you may not have been notified about.

Why is my credit score low when I always pay on time? Possible causes include: a default from an old account you may not remember or weren't notified about, a cluster of old credit enquiries from a previous period of applications, an error or identity issue on your file, or insufficient positive credit history to generate a high score (thin file). Pull your full credit report and review every entry — the reason will be there.

Can my credit score be low because of my partner's credit? No — credit files are individual in Australia. Your partner's bad credit does not directly appear on your file, and joint accounts create entries on both parties' files but don't merge the files. However, if you have jointly applied for products in the past, those applications and accounts will appear on both files.

What is a low credit score in Australia? On Equifax (0–1,200), a score below 460 is Below Average and will typically trigger automatic decline at most mainstream lenders. Between 460–660 is Average — some lenders will consider with conditions. On Experian (0–1,000), below 550 is Below Average. On Illion (0–1,000), below 300 is considered Low.

How quickly can a low credit score be fixed in Australia? It depends on the cause. Unlawfully listed defaults and unauthorised enquiries can be removed in 30–90 days, with immediate score improvement. Reducing credit card utilisation shows results in 30–60 days. Rebuilding through on-time payments takes 6–24 months. The fastest overall outcome comes from addressing all fixable issues simultaneously.

Find Out Exactly Why Your Score Is Low

A free assessment from ACS reviews your full file, identifies every contributing factor, and tells you precisely what can be fixed — and how fast.

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

Get My Free Assessment → 📞 0489 265 737 🛡️ ASIC Licensed ACL 532003 | ⭐ 4.9/5 from 976+ Reviews | 🏆 Award Winner 2022–2024

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.

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