Have you ever wondered how your credit score is determined? Who decides if you have a good or bad score? Well the answer is simple, in Australia, your credit rating score is determined by Credit Reporting Bodies (CRBs).
Credit reporting bodies determining your rating
Lenders want to make sure you’ll pay back your loan on time and in full. They check your credit score when offering you a loan or credit card. The financial institution will consider your credit rating when deciding whether or not to lend you money, how much to lend you, and even what interest rate they will give you.
There are three main CRBs in Australia that calculate credit scores:
- Equifax Australia (formerly known as Veda)
- Illion (formerly Dun & Bradstreet)
- Experian
These agencies collect, store, and analyze personal and credit-related information about individuals. Each CRB maintains its own set of credit information, so you may have different credit ratings with each agency.
Your credit score is determined by one or more of the three Credit Reporting Bureaus in Australia (CRBs). These organizations collect, store, utilize, and disclose personal and credit-related information about individuals. When you apply for a loan or credit, the lender contacts one (or more) of these agencies with your personal information and the amount of credit you are applying for. The CRB analyzes this data and subsequently calculates your credit rating. The decision to grant you a loan is made based on the preferences of the bank.
Depending on the agency, your credit score will be a number between 0-1,000 or 0-1,200. This score is then assigned a label ranging from “excellent” to “below average,” with higher scores indicating better creditworthiness.
Difference between credit rating and credit score
Credit agencies use the information in your credit file to calculate your credit rating, which is a score that represents your creditworthiness. This score is used by lenders to help them decide whether to approve your loan or credit application. In Australia, the terms credit rating and credit score are often used interchangeably, but they generally refer to the same concept: a numerical representation of an individual’s creditworthiness.
Credit Score
- A credit score is a numerical value (typically ranging from 0 to 1,000 or 1,200) that summarizes your creditworthiness based on your credit history and behavior.
- It is calculated using data from your credit report, including repayment history, credit inquiries, defaults, and the types of credit you have used.
- Credit scores are provided by Australian credit reporting agencies like Equifax, Experian, and Illion.
Credit Rating
- In Australia, credit rating is often used synonymously with credit score. However, globally, it can also refer to letter grades (e.g., AAA or BB) used to evaluate the creditworthiness of corporations or governments.
- When applied to individuals in Australia, a credit rating is essentially the same as a credit score—a measure of how risky or safe you are as a borrower.
But make sure you know how to obtain a copy of your credit report.
The information used to calculate your credit rating includes your personal details, such as your age and address, as well as information about the type of credit providers you have used in the past. Additionally, the amount of credit you have borrowed, the number of credit applications you have made, and any unpaid or overdue loans or credit will also be considered.
Finally, any Debt Agreements or personal insolvency agreements relating to bankruptcy will also be taken into account. All of this information is used to give you a single credit score, which can then be used by lenders to assess your creditworthiness.
