How does Australia credit score system work?

HI all,

New to points and just wondering if anybody has any information on how the credit scoring system operates ? I do appreciate that unlike the US racking up cards is counter productive but where is that “point” where your good to change? Changing cards annually, 6mthly or even every 3 months is that possible if your using a credit card and keeping a cleared balance continually?

There is no set point in Oz. It’s a bit of a balancing act. We have in the past cancelled most cards in the eleventh month to avoid the annual fee. We have always paid the full balance prior to the due date and occasionally check online to see how our rating is looking. We have noticed over the past two years that it has dropped a bit from being excellent to just good and the only thing that could have changed that is a: applying for increased limit on cards and b: applying for new cards after closing others.

There’s plenty of posts regarding this topic, just do a search of this site.

Yes. There is no transparency in the way Australia personal credit rating works. At least that is my personal understanding.

My personal ‘strategy’ is to keep an eye on my credit score via and (I am sure there are others out there).

If you are planning to get a mortgage in the next 12 months or so, I would try and conserve my credit score.

Try and space credit applications/enquiries a much out as possible (time).

In recent months, I did notice credit scores not improving despite no new enquiries for many months. Who knows, maybe positive reporting has gain traction.

Speaking as a recently ex-lender of 30 years…

-if you’re thinking of applying for any other finance (eg home loan, investment loan, personal loan -business loan not so much) then your credit rating could affect your application badly, particularly if the application is borderline. The main thing that’s essential: if you close cards you MUST keep the letter confirming the account is closed. And keep it for 5 years - change lender if they’re looking into your rating records further back than that. So many people would say “oh I closed that…I haven’t used that for years” yet you’d see a payment made to that card (from their bank account) within the last few weeks. Doh!! If you can’t prove closure they won’t let it drop til you do (which might cost you your new home). Warning signs for lenders are lots of current credit cards with long term balances. If you have proof of closures plus the last couple of statements for every current card (showing paid in full on/before due date) then your cards won’t hurt your application. Credit rating is one of the first checks for unsecured (personal) loans and mortgage insured loans. Perfect records and perfect conduct should never hurt. Change lenders if it does!

Thanks for the replies guys, all very informative and I will be monitoring our credit rating a little more often. We don’t have any housing or investment issues coming in the next few years so I think the general vibe is what I was thinking - it should be possible to change cards possibly every 6 months but that the banks may take advantage of the “grey”. Right now having signed up for NAB’s signature card last month and receiving 75K in QFF only to have the offer upped to 90k this week I’m tempted to try a change of cards within the month! but we’ll see how they reply to my email. We will most likely change cards earlier than 12 months so I’ll stick some info up here should there be any adverse aftermath!