Written by

Steven Lee

Mortgage Director, ODIN Mortgage & Tax

10+ years in Australian banking and mortgage lending

Last reviewed

Updated on: November 6, 2024 View profile →

Which Credit Score Do Banks Use?

Your credit score is a number lenders use to assess how reliably you manage debt. It’s based on your credit report, which includes your payment history, credit utilisation, and other key factors.

When you apply for a loan, lenders review your score to decide whether to approve your application and what interest rate to offer. However, many borrowers don’t realise that banks don’t all use the same credit score.

If you’re an Australian living or working overseas and planning to buy a home or investment property back home, your credit score matters more than you think. This guide explains which scores Australian lenders actually use, how they’re calculated, and what really influences your home loan approval.

What Credit Score Do Banks Use?

There are actually many different credit scores in Australia, and each lender may use a different one. The most common credit scores in Australia are Equifax Credit Scores, which are calculated by Equifax.

However, there are also illion Credit Scores and Experian Credit Scores, which are calculated by the other two major credit bureaus in Australia.

So, which credit score do banks use in Australia? The answer is that it depends on the lender. Some lenders may use only one credit score, while others may use multiple scores.

How to Find Out Which Credit Score Banks Use in Australia

In Australia, banks and financial institutions rely on credit scores provided by credit reporting agencies to assess an individual’s creditworthiness. The two main credit reporting agencies in the country are Equifax (formerly known as Veda) and Experian. To determine which credit score a specific bank uses, you can follow these steps.

First, it’s important to research the bank you are interested in. Visit their official website or contact their customer service to gather information about their credit assessment process.

Some banks may openly mention the credit reporting agency they utilise or provide details about the scoring models they employ. This initial step can provide valuable insights into the bank’s credit evaluation practices.

Next, it’s worth reviewing the credit reporting agencies themselves. Equifax and Experian are the primary credit reporting agencies in Australia. Browse their websites to check if they have any partnerships or affiliations with the bank you are interested in.

Banks often have contracts with specific credit reporting agencies to access credit reports and scores. This information can give you an indication of which agency the bank is likely to rely on for credit evaluations.

To gain further clarity, it is advisable to check your own credit reports. Obtain your credit reports from both Equifax and Experian to see the information they hold about your credit history.

This will give you an idea of what the bank might see when they assess your creditworthiness. You can request a free copy of your credit report annually from each agency, or you may need to pay a fee for instant access.

If you’re still unsure about the credit scoring model used by a particular bank, it is recommended to contact their customer service or visit a local branch. Engage with them directly and ask specific questions about the credit score they rely on and the credit reporting agency they work with.

The bank’s representatives should be able to provide you with the necessary information and clarify any doubts you may have.

👉 Check out: What Is a Good Credit Score for a Home Loan in Australia?

Australia's Credit Reporting Agencies

Australia has three main credit reporting agencies (CRAs) that collect and maintain individuals’ credit information. These agencies provide credit reports and scores to lenders, businesses, and individuals.

The three major credit reporting agencies in Australia are:

Equifax Australia: Formerly known as Veda, Equifax is the largest credit reporting agency in Australia. It provides credit reports and scores, as well as various credit management services.
Experian Australia: Experian is a global credit reporting agency with a significant presence in Australia. It offers credit reports, scores, and tools to help consumers manage their credit and identity.
illion: Formerly known as Dun & Bradstreet Australia, illion is another major credit check company. It provides credit reports, scores, and business information services.

These credit check companies gather data from lenders, utility companies, and other sources to create individual credit files. You can obtain a free credit report once a year from any of these agencies or when you’ve been declined credit.

Can I Trust the Score From My Bank?

Yes, you can generally trust the credit score provided by your bank, as it is typically based on your financial data and obtained from reputable credit reporting agencies like Equifax or Experian. However, it’s important to note that:

Different Scoring Models: Banks may use different credit scoring models or criteria tailored to their own lending policies. As a result, the score they provide may differ slightly from scores you get directly from credit bureaus or other sources.
Context Matters: The score given by your bank is reliable, but it’s always good to view it in context. For example, if you’re applying for a loan, another lender may evaluate your credit differently depending on their internal risk assessment or what credit bureau they use.
Frequency of Updates: Your bank’s credit score might not reflect real-time changes in your financial situation, as credit reports are typically updated periodically.

For a complete view, it’s helpful to monitor your credit across multiple platforms or directly from credit bureaus.

Understanding Diverse Credit Scoring Methods Used by Banks in Australia

No, different banks and financial institutions may use varying scoring models and criteria when assessing credit applications in Australia. While credit reporting agencies provide credit scores, it is up to the individual banks to determine how they interpret and utilise those scores, as well as how they weigh other factors in the credit evaluation process.

Each bank may have its own proprietary scoring model or use a modified version of the credit scores provided by the credit reporting agencies. These models consider various factors, including credit history, outstanding debts, payment patterns, length of credit history, and other relevant financial information.

Additionally, different banks may prioritise certain factors over others based on their specific lending policies, risk appetite, and target customer segment. For example, one bank may place more emphasis on income and employment stability, while another may focus on a borrower’s debt-to-income ratio.

As a result, it is common to see variations in credit decisions among different banks, even if they utilise the same credit reporting agencies.

Which Banks Use Equifax in Australia?

Equifax Australia is one of the leading credit reporting agencies in Australia, and many banks and financial institutions in the country rely on its services for credit assessment.

Who uses Equifax?

While it’s not possible to provide an exhaustive list of all the banks that use Equifax, several major banks in Australia have partnerships with Equifax for credit reporting. Some of these banks include:

Commonwealth Bank of Australia (CBA)
Australia and New Zealand Banking Group (ANZ)
Westpac Banking Corporation
National Australia Bank (NAB)
Macquarie Bank
ING Australia

Please note that this list is not exhaustive, and there may be other banks and financial institutions that also use Equifax Australia for credit reporting. It’s always a good idea to check with the specific bank you’re interested in or visit their website to obtain accurate and up-to-date information about their credit assessment processes and credit reporting agency partnerships.

Lenders That Use Experian Only

Experian is another prominent credit reporting agency in Australia, and while it’s not possible to provide an exhaustive list of lenders that exclusively use Experian, there are some notable financial institutions in Australia that have partnerships with Experian for credit reporting.

Here are a few examples of lenders that use Experian only:

Latitude Financial Services
SocietyOne
Wisr
Liberty Financial

It’s important to note that these lenders may primarily rely on Experian, but they might also utilise other credit reporting agencies or have their own proprietary scoring models and criteria.

How To Check Your Credit Score

To check your credit score in Australia, there are several methods you can use. Firstly, you can contact the main credit reporting agencies in the country, Equifax (formerly Veda) and Experian. They provide credit reports that include your credit score.

To access your credit score, visit their websites or reach out to their customer service for guidance on obtaining your credit report.

Another option is to use online credit score services. Several platforms in Australia offer access to credit scores. These services may have both free and paid options for checking your credit score. Examples of such platforms include Credit Simple, GetCreditScore, and Credit Savvy.

Ensure that you choose a reputable service and review their terms, conditions, and privacy policies before providing any personal information.

Additionally, some financial institutions provide their customers with access to their credit scores through online banking platforms or credit monitoring services. It’s worth checking with your bank to see if they offer this feature.

They can provide information on how to access your credit score within their banking system or through associated credit monitoring services.

When obtaining your credit score, it’s essential to use reliable sources and prioritise the security of your personal information.

Ensure that you are using reputable credit reporting agencies or trusted online platforms. Take the time to review the terms and conditions, as well as the privacy policies, of any service you choose to utilise.

Keep in mind that your credit score is just one aspect of your financial profile, and lenders consider other factors such as your credit history, income, and overall financial health when assessing your creditworthiness.

It’s beneficial to maintain a good credit history, manage your debts responsibly, and regularly monitor your financial situation to ensure a healthy financial standing.

What Credit Score Is Good for a Bank Account?

A credit score is typically not required to open a bank account. However, if you’re applying for credit products like a loan or credit card, a good credit score in Australia is usually 620 or higher on most scales (e.g., Equifax, Experian). Higher scores improve approval chances.

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Having bad credit shouldn’t stand in the way of your homeownership dreams.

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Our team of experienced mortgage brokers is dedicated to helping you navigate the complexities of obtaining a home loan with bad credit. We have extensive knowledge of the lending landscape and work closely with a network of lenders who are willing to look beyond credit scores.

FAQs about Bank Credit Scores in Australia

What is a bank credit score?

A bank credit score is a numerical rating that represents an individual’s creditworthiness, used by banks and financial institutions to assess the risk of lending money. It is based on the individual’s financial history, including factors such as:

Payment history (on loans, credit cards, etc.)
Outstanding debt levels
Length of credit history
Types of credit used (e.g., credit cards, personal loans, mortgages)
Recent credit inquiries

What is a credit score?

Credit scores are typically generated by credit reporting agencies (e.g., Equifax, Experian) and range from low to high, with higher scores indicating lower risk to lenders. A good credit score increases the likelihood of loan approval and may result in better interest rates or terms, while a lower score may limit borrowing options or lead to higher costs.

Does Australian banks use Equifax or Experian?

Banks in Australia use both Equifax and Experian for credit checks. Some banks may also use Illion. These credit reporting agencies provide banks with credit scores and histories to assess loan and credit card applications.

Which credit scores do banks use?

Banks in Australia typically rely on credit scores provided by credit reporting agencies such as Equifax and Experian. These credit scores are based on the information contained in an individual’s credit report, including their credit history, payment patterns, outstanding debts, and other relevant factors.

While different banks may have specific scoring models or criteria, the credit scores provided by reputable credit reporting agencies serve as important indicators of an individual’s creditworthiness.

Do banks use CIBIL or Experian?

In Australia, banks primarily use Experian, Equifax, or Illion for credit scoring, not CIBIL, which is used in India. Australian banks rely on these local credit reporting agencies to assess creditworthiness.

How credit scores work

A credit score is a numerical representation of an individual’s creditworthiness based on their credit history and financial behaviour. Lenders, such as banks or credit card companies, use credit scores to assess the risk of lending money to someone. Here’s how credit scores work:

1. Credit Score Ranges

Credit scores typically range from 300 to 850. Higher scores indicate better creditworthiness, while lower scores suggest higher risk to lenders. Common credit score ranges are:

Excellent: 800-850
Very Good: 740-799
Good: 670-739
Fair: 580-669
Poor: 300-579

2. Key Factors that Affect Credit Scores

Credit scores are calculated based on several factors, each weighted differently:

Payment History (35%): Your track record of paying bills on time. Missed or late payments lower your score.
Amounts Owed (30%): The amount of credit you’re using compared to your credit limits, also known as the credit utilization ratio. High balances relative to limits can lower your score.
Length of Credit History (15%): The age of your credit accounts. A longer credit history can improve your score.
New Credit (10%): The number of recent credit inquiries or new credit accounts opened. Too many can negatively impact your score.
Types of Credit (10%): A mix of credit types, such as mortgages, credit cards, and instalment loans, can boost your score.

3. How Credit Scores Are Used

Loan Approval: Lenders use your credit score to determine whether to approve your loan application. A higher score increases your chances of approval.
Interest Rates: Your score can affect the interest rate you’re offered. Better scores often result in lower interest rates, saving you money over time.
Credit Limits: Lenders may offer higher credit limits to individuals with good credit scores.
Rental Applications: Landlords may check credit scores to assess how reliable you are with paying rent.

4. Types of Credit Scores

FICO Score: One of the most commonly used credit scoring models in the U.S.
VantageScore: Another popular scoring model, used by some lenders and credit agencies.

Both models use similar factors, but their formulas may weigh elements differently.

5. How to Improve Your Credit Score

Pay bills on time: Ensure timely payments on all credit accounts.
Reduce credit card balances: Aim for a credit utilization ratio below 30%.
Avoid opening too many accounts: Limit new credit applications, especially within short periods.
Keep old accounts open: Older accounts can help increase the average age of your credit history.

By understanding how credit scores work and managing your financial behaviour responsibly, you can maintain or improve your score, which will benefit your overall financial health.

Which are Australia's credit reporting agencies?

Australia has three main credit reporting agencies (CRAs) that collect and maintain individuals’ credit information. Here are Australia’s credit reporting agencies:

Equifax: Previously known as Veda, Equifax is the largest player in the industry. It offers comprehensive credit reports, scores, and a range of credit management services.
Experian: A global leader, Experian Australia provides credit reports, scores, and tools to help individuals manage their credit and identity.
illion: Formerly Dun & Bradstreet Australia, illion is another major agency specialising in credit reports, scores, and business information services.

How your credit score is calculated

Your credit score is calculated based on several factors from your credit report that reflect your financial behaviour. Each factor contributes differently to your score, and the exact formula varies between credit reporting agencies. However, the key components considered in credit score calculations are similar across most models.

Here’s how the calculation typically works:

1. Payment History (35%)

This is the most significant factor. It looks at whether you pay your bills on time, including credit cards, loans, and other credit products.
Late or missed payments, defaults, and bankruptcies can negatively impact your score.

2. Credit Utilization (30%)

This factor reflects the amount of credit you’re using compared to your total available credit (also known as your credit utilization ratio).
A high credit utilization ratio (using a large percentage of your available credit) can lower your score, while keeping balances low relative to your credit limit can improve it.

3. Length of Credit History (15%)

The age of your credit accounts, including how long each account has been open and how long since you’ve used certain accounts.
A longer credit history generally boosts your score as it shows a track record of responsible credit management.

4. New Credit Inquiries (10%)

This factor considers the number of recent credit inquiries or applications for new credit.
Each time you apply for credit, a hard inquiry is made, which can slightly reduce your score, especially if there are many inquiries within a short time.

5. Credit Mix (10%)

Having a variety of credit types, such as credit cards, mortgages, and instalment loans, can positively affect your score.
Lenders like to see that you can manage different types of credit responsibly.

6. Negative Events

Defaults, bankruptcies, and court judgments can significantly lower your score.
These negative events stay on your credit file for a set period and reduce your creditworthiness in the eyes of lenders.

Credit Score Calculation by Agencies

Each credit reporting agency (Equifax, Experian, illion) may weigh these factors slightly differently. Your credit score is also affected by the specific scoring model the agency uses, but the general principles remain the same.

Tips for Maintaining a Healthy Credit Score

Pay bills on time to maintain a positive payment history.
Keep credit card balances low to reduce credit utilization.
Limit new credit applications to avoid multiple hard inquiries.
Keep old accounts open to lengthen your credit history.

Managing these factors well helps improve and maintain a good credit score.