What your Equifax Score says about you as a
borrower

On your credit file, held by Equifax (formerly known as Veda Advantage), there’s a score which compares
you as a borrower to the rest of the Australian population.

This is known as your Equifax Score (previously VedaScore) and it’s one of the factors lenders consider
when they assess your mortgage application.

Think you might have a poor credit score?
Talk to our experts to get a free assessment.

Do I have a good score?

As part of your home loan application, we obtain a copy of your credit file from Equifax.

The score provides us with a good indication of your strength as borrower.

So what’s considered a good Equifax Score?

  • Excellent: Any score above 700.
  • Good: Any score from 600 to 700.
  • Average: 550 is the average score.
  • Bad: Any score from 400 to 500.
  • Very bad: Any score below 400.

The average score for all Australians who are credit active is 550, however, your score can range from
anywhere between -200 to 1,200.

Having a score of 550 would mean that you have a 1 in 12 chance of having a default lodged on your credit
file in the next 12 months, whereas a score of 200 would mean you have a 1 in 2 chance.

It’s extremely rare to see scores higher than 900 or lower than 200.

How do I get a copy of my Equifax Score?

You’ll be able to see your Equifax Score /VedaScore when you apply for a home loan with one of our
mortgage brokers.

Unfortunately, we cannot provide you with a copy of your Equifax Score.

If you’re still curious about your score, you can order a copy by contacting
Equifax
.

Check out their offers on their pricing page.

Their Starter Pack starts at just under $80 and includes your full credit report.

You’ll receive this report annually.

How does Equifax calculate your score?

Your Equifax Score is ultimately a score of all the details of your credit file.

Basic personal information
This includes your full name, date of birth, gender, address, previous address, drivers licence number,
employer and previous employer.
If you’re a director or proprietor you should check both the individuals and commercial sections of your
credit file.

The type of credit provider you applied with
There may be different levels of with each lender.

For example, credit unions and building societies often have lower risk customers than major banks who in turn have lower risk customers than specialist lenders. Applying with a ‘risky’ lender is likely to reduce your credit score and applying with a ‘safe’ lender can increase your score.

The nature of the credit or loan
Home loans and HELP Debt are seen as a lower risk than car finance or payday lending. Contrary to popular opinion, applying for a home loan can actually increase your credit score.

Credit enquiries
Credit that you have applied for in the last five years are listed as credit enquiries.

A variety of types of credit show up on your credit file including credit cards, home loans, loans you guaranteed for your business and even mobile phone contracts.

If you have a large number of credit enquiries in the last five years then this will negatively impact your score. Having no enquiries can also reduce your score as there’s little data for Equifax to work with.

Shopping pattern
If you apply for many loans from different lenders in a short period of time then this looks like a sign of financial distress and so your credit score will be impacted.

Defaults
Loans or accounts where you’re more than 60 days overdue are listed as defaults. Defaults have a significant negative impact on your credit score.

Court writs
A court writ is a formally written document that is issued by the court, usually because someone has lodged a court case against you.

Court judgments
Judgments are listed when you’re unable to come to a suitable agreement with the
creditor

Bankruptcy history (including Part IX history)
Bankruptcy or entering into a Part 9 agreement will cause you to have a negative credit score. If you’ve been discharged from bankruptcy then you may be able to borrow from a specialist lender.

Buy now pay later
Buy now pay later (BNPL) transactions and facilities appear on your file as either Accounts. Enquiries or Defaults. However, arrears on BNPL will not lower your score and making perfect repayments does not increase your Equifax score.

Common buy now pay later providers in Australia are Afterpay, ZipPay, Humm, Openpay, Klarna, etc.


How do lenders use Equifax Score?

Many lenders have Equifax’s score feed directly into their own scorecard that they use to assess loan
applications.

Others ignore the Equifax Score and just use the data from your credit file.

Whilst your score with Equifax will not be the only factor that the lender considers, it will make a big
difference to the lender’s own credit score and the outcome of your application.

If this may be a problem for you then you can consider:

What is a negative Equifax Score?

If you have serious credit infringement then your score will be negative! It’s possible to have a score as low as -200.

However, if you have been bankrupt or been in a part IX agreement in the last 7 years then your score will be between -994 and -999.

Equifax decided to do this to better differentiate between the risk associated with different types of people who have been bankrupt.

We’re not aware of negative scores being used by any lenders at present, however, we expect that once the accuracy of negative scores is proven then some specialist lenders will use this in their assessment rather than their current risk matrices.

How can I improve my Equifax Score?

Improving your Equifax Score /VedaScore is different to improving your credit score with a particular lender.

Equifax Score is calculated looking only at your credit file, whereas a lender is looking at all aspects
of your application.

There are a few simple steps that you can take to improve your Equifax Score.

  • Ask Equifax to fix up any data that’s incorrect.
  • Avoid moving address or employer unnecessarily.
  • Avoid applying for credit that you don’t need.
  • Avoid applying for credit with less reputable lenders.
  • Pay all of your debts and bills on time every time.
  • If you have any defaults then make sure that they are paid.

Why are “enquiries” so important?

While most people are aware that a bankruptcy, court writ or default will have a large effect on their
Equifax Score, few people are aware that just applying for a loan can damage their credit file.

Each time you apply for a loan, the lender checks your credit history with Equifax, and Equifax records
this as an “enquiry” on your credit file.

This data has a surprisingly large impact on your score! In particular, Equifax takes the following into
account:

  • Number of enquiries: Too many enquiries makes you look like a distressed or desperate borrower.
  • Type of credit: If you apply for a mortgage then this is a low risk whereas someone applying for multiple credit cards is seen as a high risk.
  • Choice of lender: If you’re applying with lenders of last resort then this will have a bigger effect on your VedaScore than applying with a bank.
  • Shopping pattern: Applying for 3 credit cards over 3 years is seen as normal, however applying for three credit cards in one go is seen as a risk.

Positive credit reporting and Equifax Scores

At the moment, there is a limited scope of information that banks can access to get a picture of you as a
borrower.

Since the rollout of positive credit reporting or comprehensive credit reporting
(CCR)
in 2014, a whole lot more of your credit history is available.

This has both a negative and positive impact on your Equifax Score /VedaScore depending on your
situation.

Apart from the information that’s already available to credit providers, your Equifax Score (VedaScore)
now takes into account the following:

  • The date a credit account is opened.
  • Current limit on credit accounts.
  • The nature of the credit account.
  • The date a credit account is closed.
  • 24 months account payment history which will tell the bank whether you paid the minimum amount
    required on your financial commitments each month or not.
  • A “default” is listed on your credit file for being late by 60 days or more and for amounts you owe
    over $150, which is up from $100. It will still remain on your file for 5 years.

Apply for a mortgage

Do you have a low Equifax Score /VedaScore? Our mortgage brokers are experts in credit scoring and know
which lenders will assess your application favourably.

Please call us on 1300 889 743 or fill in our free assessment form and one of our mortgage brokers will let you know if you can qualify for a home loan.

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