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Equifax Credit Scores and Report: Everything You Need to Know

Keep reading to find out everything you need to know about Equifax

18 November 2022Lloyd Smith 7 min read
Equifax Credit Scores and Report: Everything You Need to Know

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Since lending can be risky and there is a possibility of default, most lenders conduct credit checks to understand the borrower's credit risk profile before extending a new line of credit.

Lenders use credit reports generated by credit reporting agencies like Equifax. Instead of collating personal information from every individual, lenders like financial institutions and banks prefer to do Equifax credit checks to quickly assess the creditworthiness of different individuals.

Equifax credit reports also allow people to analyse if they can easily get approved for a credit application or not.

Here’s everything you need to know about Equifax credit scores and reports.

Equifax is a leading credit reporting body that operates globally. The organisation traces its roots back to 1898 when it was established in Tennessee to report the creditworthiness of customers of local grocers. Equifax Australia started its operations in 2016 after acquiring Veda Australia, a credit reference association.

Based on the information reported to it by credit providers and public records of bankruptcies or liens, Equifax prepares credit reports for every credit-active individual and assigns them a credit score.

Equifax Australia credit score is assigned as a number between 0 to 1200. The higher your score is, the lower your credit risk and the more attractive you are to lenders. Ideally, a credit score above 660 is considered good.

Here’s a breakdown of credit scores by Equifax:

Credit score range

Equifax

Below average/Poor

0 - 459

Average

460 - 660

Good

661 - 734

Very Good

735 - 852

Excellent

853 - 1200

Equifax credit scores are divided into various bands or ranges. Each Equifax credit score range in Australia indicates a different category of a borrower’s creditworthiness and the likelihood of occurrence of an adverse event. An adverse event can be defaulting on payments, going bankrupt, or getting a court judgement.

Here’s how to understand what Equifax credit score ranges mean:

  • Excellent (853-1200): A score within this range means you are considered a highly creditworthy borrower without any adverse events within 12 months. When applying for a credit product, you are highly likely to be approved by credit providers and also get them on the best terms (low interest rates and better benefits)

  • Very Good (735-852): If your score is within this range, your creditworthiness is better than most. You are likely to get approved for credit products but you may not have much room to negotiate the terms.

  • Good (661-734): Falling in this range indicates that you may have experienced some irregularities in the past, but your credit score hasn’t fallen down by a lot. You might find it difficult to get many pre-approved offers with low interest rates. You are also unlikely to get the same rates as those who are in the ‘Excellent’ or ‘Very Good’ range.

  • Average (460-660): This range signals that you may have defaulted on payments in the past or faced similar issues. Even though your credit applications may get approved, you would probably have to pay a higher interest rate.

  • Below Average/ Poor (0-459): Your credit history is extremely poor, and your credit score is in the bottom 20% of the population that borrows credit. You have a very slim chance of getting approved for new credit without a cosigner or collateral.

However, it's important to note these are not comparable with credit score ranges in Australia assigned by other credit rating agencies as each agency uses their unique credit scoring algorithm.

Credit scores are an indicator of a borrower’s creditworthiness. A good credit score means that a person has a track record of making timely repayments and is responsible with their finances.

Having a good credit score from Equifax can help you in the following ways:

  • You are more likely to get approved by banks and financial institutions when you apply for a new line of credit like personal loans, home loans, car loans, or credit cards
  • You may be offered lower interest rates on credit products which can help you save money in the long run
  • You may receive better lending terms such as a higher credit limit on your credit card or a higher pre-approved loan amount. You may even have more bargaining power to negotiate, compared to those with poor credit scores.

Equifax credit score calculation is based on your credit report data. It considers factors such as your credit history, credit utilisation, and credit mix and then uses the Equifax scoring model to calculate the credit score. Though, the exact formula used is proprietary and not available to the general public.

Here are the various factors that impact your Equifax score:

Repayment history

Your repayment history is the most crucial factor that impacts your Equifax personal credit score. A prospective lender wants to know whether you repay debts consistently and on time, as it is risky for them to extend credit to someone who doesn’t have a good track record of repayment.

Here’s what Equifax considers from your repayment history for calculating your credit score:

  • Have there been any delays with repayment in the past?
  • How frequently do you miss a payment?
  • How recently have you missed making a payment?
  • Are there any previous bankruptcies and delinquencies?
  • How much do you owe?

Credit history

Lenders want to know if you have a history of responsibly handling and paying off credit. That’s why credit history is one of the major factors that affect your credit score.

Credit reporting agencies track the amount of time that has passed since you opened your first credit account. The longer the age of your oldest account, the better is your Equifax credit rating.

Credit utilisation

Credit utilisation is the ratio between the credit limit of your account and total used credit. If you have too many credit accounts and you are constantly exhausting the majority of your credit limit or spending the entire credit limit, you are likely to have a high credit utilisation ratio and a low Equifax personal credit score.

Credit mix

Having a healthy credit mix shows that you can handle different credit accounts. This means holding both revolving debt (such as credit cards) and instalment loans (such as personal loans) can boost your credit rating.

Equifax credit score model also considers how many accounts of each type of credit you have.

Credit inquiries

Every time you apply for a new credit product, a query is initiated to check your credit score, which is also added to your credit report. These are considered hard inquiries. If you have too many hard inquiries in a short span of time, it can affect your Equifax score.

Your credit report is a summary of your credit behaviour. Here’s what your credit report from Equifax includes:

Personal information

Your Equifax credit report contains your personal information including your name, current residential address, date of birth, and social security number. However, such information doesn’t impact your Equifax personal credit score.

Credit account information

This part of the report contains all the information creditors report to Equifax. It has details about the following:

  • Active accounts in your name (including credit cards and instalment loans);
  • The opening date of such accounts;
  • Credit limit/loan amount;
  • Details of monthly repayments of loan EMIs, credit card bills, and utility bills;
    Information about missed repayments
  • Accounts you may have held in the past that are now closed.

However, accounts not reported by lenders to Equifax do not feature in the report.

Publicly available information

Your report includes information available as part of public records, such as filing for bankruptcies and insolvency, judgments passed by the court in relation to your debt, and debt agreements.

Commercial credit information

Information of any credit that is not for personal or household use features in your credit report. This can include details of commercial credit for business, inquiries on business partners, directorship, overdue accounts, and credit inquiries for extending commercial credit.

Credit inquiries

Your Equifax credit report also includes information on credit inquiries made by lenders in the past five years. The name of the credit provider, the reason for inquiry, the date of inquiry, etc., are some of the critical particulars identified in the report. Credit inquiry details where you are a guarantor for someone else are also included.

Even if your credit score is not good currently, it doesn’t have to remain that way. Here’s how to improve it:

Be prompt with your debt payments

Delayed payments are one of the key reasons for poor credit scores. Being consistent with repayments can help you build a track record and improve your score.

You can set up auto-debits to ensure that you don’t miss even a single payment.

Don’t get credit cards or loans unnecessarily

Don’t apply for new credit cards or loans if you don’t need them. Multiple applications for new lines of credit lead to multiple hard credit inquiries.

While a single hard inquiry isn’t alarming, too many such inquiries in close succession can bring down your score.

Check your credit report regularly

Since Equifax credit reports are prepared based on information reported by creditors, erroneous data can be recorded. For instance, even though you may have repaid on time, they may not be accurately recorded by the lender.

Regularly reviewing your report can help you spot such errors and contact Equifax for correction.

Apply for a credit-builder card

Credit cards for bad credit in Australia can help you improve your credit score too. The entry barrier for such cards is low as lenders usually perform soft checks to assess your eligibility instead of reviewing your credit score.

Even though the credit limits are lower than regular cards, you can use them and build your credit score through timely repayments.

There is no clear answer to choosing between Experian vs Equifax.

Both are leading credit reporting agencies in Australia. Their unique scoring algorithm impacts how is credit score calculated by them. As Equifax considers the maximum amount of comprehensive credit reporting data compared to any other credit bureau in the country, the scores may vary.

If you need to decide whether you should review Experian credit report or Equifax in Australia, it is best to ask the lender which agency they consider for making decisions.

You can access your Equifax free credit report by:

  • placing an online request on the website;
  • mailing at GPO Box 964, North Sydney, NSW 2059; or
  • calling 13 8332

You should be at least 18 years or above to order a copy of your credit report.

Now that you know what Equifax does and how to understand its credit report, make sure to check your Equifax credit score to stay on top of your financial health.

The higher your score, the easier it will be for you to access credit products in the market.

With ClearScore, you can check your credit score for free in just a few clicks. Take a look.


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Written by Lloyd Smith

General Manager AU

Lloyd spreads the word about how awesome ClearScore is.