Most people have a vague idea that their credit score matters. You hear about it when applying for a home loan or a new credit card but it can be a blurry concept. A number that sits in the background of your financial life until—suddenly—it doesn’t. And that’s exactly the problem. Credit scores are treated like a silent judge, yet most people don’t understand how the scoring system works, what influences their score, or even how to check it properly.
Worse, a lot of the information floating around is plain wrong.
What Your Credit Score Is
Your credit score isn’t one fixed number. Depending on the credit reporting body—Equifax, Illion, or Experian—your score might look different. Each of these agencies uses its algorithm, rating you on a scale from “below average” to “excellent.” But the core idea remains the same: your score is a reflection of your creditworthiness. In other words, how risky it is to lend you money.
It’s not a measure of how rich you are. It doesn’t care how much you earn, whether you’ve got three side hustles, or if you’ve just landed a promotion. It’s about your history of managing credit—bills, loans, repayments, and your overall behaviour with borrowed money. Here’s the kicker: even if you’ve never missed a payment in your life, your score could still be low.
The Most Common Myths (That Could Be Hurting Your Score)
Myth #1: Having no debt means a perfect score
This is one of the most damaging misconceptions. People assume that by avoiding debt altogether, their score will automatically be top tier. In reality, having no credit history often means no score or a low one.
Lenders want to see a track record. If you’ve never used credit, they have no idea how you behave with borrowed money. Even a simple phone plan or credit card used responsibly can help build your profile.
Myth #2: Checking your score will hurt it
This one comes from a confusion between soft and hard enquiries. When you check your credit score through a service like My Credit File (Equifax) or Tippla, it’s considered a soft enquiry. It doesn’t affect your rating.
What does impact your score is applying for multiple credit products in a short time—like five credit cards in a week. That’s a red flag to lenders.
Myth #3: All scores are created equal
Each bureau has its scale. For example:
- Equifax: 0 – 1200
- Experian: 0 – 1000
- Illion: 0 – 1000
You might be “very good” with one and just “average” with another. That’s because different lenders report to different agencies, and they all use different data points. So if you’re planning to get any type of loan, whether it is a home loan, a credit card, or even before applying for an online loan, it’s worth checking your file with all three major bureaus.
The Mistakes People Don’t Realise They’re Making
Not paying attention to defaults under $150
It sounds minor, but even small defaults—an old gym membership you forgot to cancel, a utility bill that slipped through the cracks—can sit on your credit report for five years. This is true even if you later pay the amount. Lenders don’t just care about the size of the default. They care about the fact that it happened.
Using too much of your available credit
Say your credit card has a $10,000 limit and you consistently use $9,000 each month, even if you pay it off in full. Some lenders view this as high utilisation, which can signal risk. It’s not just whether you pay—it’s how you manage your limit.
Experts suggest staying below 30% of your total available credit wherever possible.
Repeatedly applying for new loans or credit cards
Each application triggers a hard enquiry on your file. Multiple applications in a short period can signal desperation or instability. This is especially common with BNPL users trying to juggle multiple platforms like Zip, Humm, and Afterpay.
How Positive Credit Reporting Changed the Game
In recent years, Comprehensive Credit Reporting (CCR) has shifted the way credit scores work. Previously, reports only showed negative events—defaults, missed payments, bankruptcies.
Now, they also include positive behaviour, like:
- On-time repayments
- Credit limits
- Type of credit held
This is a good thing. It means a single late phone bill won’t tank your score if the rest of your credit behaviour is solid. But it also means lenders see more than ever before, so there’s nowhere to hide.
According to ASIC’s MoneySmart, CCR has made it easier for responsible borrowers to get better deals—but only if they consistently pay on time.
Why Lenders Care So Much
It’s not just about whether you’ll repay the loan. It’s about how you manage repayments. A lender would often prefer a borrower with a mid-range income but perfect repayment habits over a high-income earner with sloppy credit management. That’s why mortgage brokers always emphasise the “five C’s”—and credit history plays a key role.
If your score is low, lenders may:
- Charge higher interest rates
- Require a larger deposit
- Reject the application outright
Some may even suggest you “clean up” your report before applying, especially for high-value loans like mortgages.
How to Take Control of Your Score
If you’ve never checked your credit report, now’s the time. Under the Privacy Act, you’re entitled to one free copy per year per bureau.
Here’s where to get started:
- Equifax: http://mycreditfile.com.au
- Illion: https://www.illion.com.au/
- Experian: http://experian.com.au
Once you have your report:
- Check for errors (wrong address, duplicate accounts, unauthorised enquiries)
- Dispute anything that shouldn’t be there
- Create a plan to manage existing debts
And most importantly—set reminders for bills. Payment history now counts every single month under CCR.
Your credit score isn’t something to fear or obsess over. But it’s not something to ignore either. It quietly influences your access to loans, the rates you’re offered, and sometimes even your ability to get a rental property or sign up with a telco. By understanding how it works, debunking the myths, and avoiding common mistakes, you can turn your score from a silent threat into a quiet advantage.