A good credit rating opens doors. It can mean a cheaper home loan, a credit card with a better rate, and a smoother rental application. The good news is that a strong rating is not about earning a big salary or having a perfect past. It comes down to a handful of steady habits, repeated over time. Here is what a good credit rating looks like, and the ten habits that build one. For the official facts behind this guide, see Moneysmart’s guide to credit scores and credit reports.
What counts as a good credit rating?
Your credit rating is a number that sums up your credit history. In Australia, the two main credit reporting bodies are Equifax and Experian, and they use different scales. Equifax scores run from 0 to 1,200, while Experian scores run from 0 to 1,000. A higher number means lenders see you as less risky.
Here is how the bands compare:
| Band | Equifax (0–1,200) | Experian (0–1,000) |
|---|---|---|
| Excellent | 853–1,200 | 800–1,000 |
| Very good | 735–852 | 700–799 |
| Good | 661–734 | 500–699 |
| Average | 460–660 | 300–499 |
| Below average | 0–459 | 0–299 |
As a rough guide, a score of 661 or higher on Equifax, or 500 or higher on Experian, puts you in “good” territory. The average credit score in Australia sits around 657, so if you are above that, you are already doing better than most people. If you are not sure where you stand, start with our guide on what a credit score is and how to check your credit score for free.
10 habits that build a good credit rating
1. Pay every bill on time
This is the single biggest factor. Your repayment history makes up a large share of your score — around 35% according to Experian — and a payment is recorded as missed if it is not made within 14 days of the due date. That missed payment then stays on your record for two years. Set up direct debits for your phone, internet, electricity and loan repayments so a busy week never turns into a black mark.
2. Pay more than the minimum on credit cards
Paying only the minimum keeps the account in good standing, but paying more — or clearing the balance in full — lowers the amount of credit you are using and cuts the interest you pay. Both help your rating over time.
3. Keep your credit use low
Lenders look at how much of your available credit you actually use. As a rule of thumb, try to keep your total balances under 30% of your combined credit limits. If your card limit is $5,000, aim to owe less than $1,500 on it most of the time. If your balances are high, ask your provider about lowering your limit once you have paid the balance down — a lower limit makes it easier to stay under that 30% line.
4. Limit how often you apply for credit
Every credit application is recorded on your file and can nudge your score down for a while. Several applications in a short period look risky to lenders. Before you apply, compare products properly and only apply for the one you actually want. Avoid applying for store cards and credit cards on impulse.
5. Check your credit report regularly
You can get a free copy of your credit report every three months from both Equifax and Experian. Check that every loan and debt listed is really yours, and that your name, date of birth and address are correct. If something is wrong, contact the credit reporting body and ask them to fix it — correcting mistakes is free. A wrong listing can drag your score down for no reason.
6. Keep older accounts open
The length of your credit history matters. An old credit card you have managed well for years shows lenders a long track record of responsible behaviour. Closing it shortens your history, so unless the card has a high annual fee you no longer need, it is usually better to keep it open and use it lightly.
7. Build a history if you have none
You cannot prove you are a reliable borrower without any borrowing history. If you have never had credit, a low-limit credit card used for small purchases and paid off in full each month is a simple way to start building a record. Read our guide on whether you need a credit card to build a credit score before you decide.
8. Stay on top of buy now pay later
Buy now pay later services can show up on your credit report, and missed payments can hurt your rating just like a missed loan repayment. Treat every Afterpay or Zip payment like any other bill, and read our guide on whether buy now pay later affects your credit score if you use these services often.
9. Pay off defaults and old debts
A default is recorded when a debt of $150 or more is at least 60 days overdue, and it stays on your credit report for five years. Paying the debt does not erase the listing, but your report will show it as paid, which looks far better to a lender than an unpaid default. If you are struggling, ask your lender about a financial hardship arrangement — this does not affect your credit score, and as long as you stick to the agreed plan you are shown as up to date.
10. Be patient and stay consistent
There is no shortcut to a good credit rating. Positive behaviour takes time to show up in your score, and negative marks fade slowly. The people with the best ratings are not doing anything clever — they pay on time, borrow modestly, and check their report once or twice a year, every year.
How long does it take to build a good credit rating?
It depends on where you are starting from. If you have a thin file with no history, six to twelve months of steady on-time payments can move you into a solid band. If you are recovering from missed payments, remember that repayment history is only kept for two years, so consistent good behaviour starts to outweigh old mistakes within that window. Defaults take longer to clear — five years — which is why avoiding them matters so much.
What hurts your credit rating the most?
The fastest way to damage a rating is a default or a string of missed payments. Multiple credit applications in a short period also hurt, as does maxing out your credit cards. One thing that does not hurt your rating is checking your own score — that is a soft enquiry and has no effect, so check it as often as you like.
Be wary of companies that charge you to “repair” your credit. The only thing they can ask a credit reporting body to remove is information that is wrong — and you can do that yourself, for free.
Frequently asked questions
What is a good credit rating number?
On Equifax, 661 and above is rated good, 735 and above is very good, and 853 and above is excellent. On Experian, 500 and above is good, 700 and above is very good, and 800 and above is excellent.
Can I have a good credit rating with no credit history?
Not really — with no history, lenders have nothing to judge you on, so your score will be low or you may not have one at all. A small, well-managed credit product is the usual way to start building a history.
Does checking my own credit score lower it?
No. Checking your own score or report is a soft enquiry and never affects your rating. Only applications for credit, made by lenders, are recorded as enquiries.
How do I fix a mistake on my credit report?
Contact the credit reporting body (Equifax or Experian) that holds the report and ask them to correct it. This is a free service. If the mistake came from a lender, you can also raise it with them directly.
Is a good credit rating the same as a good credit score?
Yes. “Credit rating” and “credit score” are used to mean the same thing — the number that sums up your credit history. Your report also shows a band, such as good or excellent, which is sometimes called your credit rating too.
This article is general information only and is not personal financial advice. For advice about your own situation, speak with a licensed financial adviser or contact the National Debt Helpline on 1800 007 007.
