Buying your next home?
See our home loan tools, articles and resources to help you explore your home loan options. We'll help you get to a good place.
Your credit score
You often hear about credit scores, which can be important to your finances. But it can still feel like something you need to learn more about, like what a credit score actually is, how it gets calculated and how it can be improved over time. Let’s jump in!
Your credit score is a number based on your financial history that helps banks and other lending institutions determine how much (or if) they can lend to you. It can change the interest rate you get offered, the amount you can borrow or even the payment terms. In other words, it’s a pretty powerful number.
While each credit reporting body has their own rating system, for a range between 0 and 1000, anywhere from 500 – 800 can be considered average to good, and above 800 would be considered excellent.
Your credit score is calculated based on the information in your report, but usually factors in:
- How much debt you have (credit cards, loans, BNPL)
- The types of accounts you’ve had
- The number of applications for credit you make
- Whether you make repayments on time
In fact, even your ability to pay for your utilities on time will affect your credit score – which is another reason to ensure you set up a solid budget. You can learn more about your credit score, including what is included and how to check it over at the MoneySmart website.
You can improve your credit score over time with good behaviours. Your credit score is dynamic, so if you actively manage your debt and pay all your bills on time, you should be able to see it improve. But it doesn’t happen overnight, so sticking to a plan can help.
Ultimately, the best way to improve your credit score is to know where you’re starting, so getting your score is a good first step – don’t worry, it’s a myth that checking your own credit report reduces your score (requests that are factored in refer to credit providers requesting your report, often in response to an application for a new line of credit).
ARTICLE
Credit scores: What are they and why do they matter?
Credit scores are part of getting a loan or a credit card. But what are they? And are credit scores really that scary? We've got all the answers you need.
The information set out above is general in nature and has been prepared without taking into account your objectives, financial situation or needs. Before acting on the information, you should consider whether the information is appropriate for you having regard to your objectives, financial situation and needs. By providing this information ANZ does not intend to provide any financial advice or other advice or recommendations. You should seek independent financial, legal, tax and other relevant advice having regard to your particular circumstances.