What are credit scores used for?

Learn what that magic number can do for you. 

A great credit score can unlock a world of financial opportunities. On the other hand, having a low credit score can hold you back from big milestones like homeownership, your dream car and financial freedom.

What's in this guide?

Q1: What are credit scores?

Your credit scores you actually have multiple sum up your creditworthiness in a tidy little number. They are generated by the Credit Reporting Bureaus CRBs using data from your credit report, which collects information about your financial history over time. As mentioned above, a good credit score comes with some serious perks. But if you let yours slip, it might be harder for you to reach your financial goals.

Things that can impact your credit score:

  • Too many credit enquiries in a short period of time

  • Defaults or bankruptcy

  • Changing your address

  • If you have no credit history yep, this affects your score too!

Q2: What’s the point of credit scores?

Your credit scores, and your credit file more broadly, are used in various circumstances, but the most common scenario is that you may be seeking credit to fund a significant purchase. Because your credit file contains valuable information that indicates your level of creditworthiness, it can be used as a tool to appropriately match you with a credit product.

In layman's terms, your credit score tells a lender how responsible you are with your money.

A high score means less risk for the lender. A lower score indicates a higher risk.

Lenders may also calculate their own credit score for you when you apply for a loan.

Q3: How can my scores be used?

  • Applying for a mortgage

    Your credit scores play a role in determining your eligibility for a home loan. A mortgage is a huge commitment for you and the lender. With such a large sum of money comes a lot of risk, so the lender will thoroughly assess your financial standing before offering you a loan. This will involve a check through your credit report. With a great credit score, you could have access to higher borrowing amounts and a better interest rate. So, it pays to keep your scores in good shape if you're considering buying a home or investment property.

  • Applying for a credit card

    We don't love credit cards – or any high-interest debt, for that matter. But, when used responsibly, they can be a handy tool to have in your arsenal. However, when applying for a credit card, your credit scores will play a role in the decision process. A lower credit score may limit your borrowing capacity i.e. your card limit and may disqualify you from being approved at all. A higher score might unlock higher-tier credit cards with great perks.

  • Applying for a personal loan

    As with a mortgage or credit card, when applying for any type of credit product, your credit scores will be taken into account. A lower credit score can limit your borrowing capacity and sometimes even nudge you out of the running for a personal loan altogether. A higher score can give you the gift of choice between lenders, loan terms, repayment frequency and even interest rates. Your credit scores can give you the power to snag the best deal.

  • Applying for a rental property

    This might seem like an odd one, but landlords or the agencies that look after their properties usually conduct credit checks on potential tenants during the application process. This helps them determine how reliable you are when it comes to meeting your financial obligations. If they see that you always pay your bills on time and you're not under financial stress, they will be more likely to accept your rental application. If, on the other hand, your credit report demonstrates a history of late payments, they might question your ability to pay the rent on time.

  • Applying for a job

    As if you didn't have to jump through enough hoops when gunning for a new role. It's possible your potential employer might want to run a credit check on you during the screening process. They will ask for your consent before doing so, but with your thumbs up, they'll request your credit file from one of the Credit Reporting Bureaus. They will conduct a 'soft check' which does not negatively impact your scores. Your credit file may contain important information such as your employment history, personal details to make sure you really are who you say you are, court orders and major defaults or debts owing.

  • Applying for phone plans and utilities

    Yep, each time you change providers or upgrade your plan it may trigger a credit check!

Q4: How can I check my scores?

With Wisr, you can check your credit scores for free and as often as you want. We do a 'soft check' which means it does not negatively impact your scores. Get your info ready and give it a crack!





What is the purpose of a credit score?

To sum up your financial history in a neat little number.

What are credit scores used for?

Credit scores are often used by lending companies to determine your ability to repay a loan, but they can also be used to assess employment and rental applications.

Who keeps your scores?

The Credit Reporting Bureaus are responsible for maintaining your credit reports over time. Australia's major reporting bureaus are Equifax, Experian and Illion.





What is considered a good credit score?

Since all three credit bureaus use different scales, the numbers and tiers change slightly:

  • Equifax: Scores between 841–1,200 are considered excellent, 756–840 are very good, and scores between 666–755 are good.

  • Experian: Scores above 800 are considered excellent; between 700–799 is very good; and between 625–699 is good.

What is a soft credit enquiry?

A soft enquiry or 'soft check' or 'access seeker enquiry' occurs when either you or an authorised third party appointed by you checks your credit reports. This generally happens when you first express an interest in a credit product such as a loan or mortgage. Often, you can get a rate estimate with a 'soft enquiry' before proceeding with an application. This allows you to shop around for the best deal without impacting your scores. However, not all credit providers will offer this option. So be sure you understand what kind of 'check' is being conducted when seeking a rate estimate.

Soft checks or 'soft enquiries' also occur when you look at your credit scores to see what kind of shape they're in. Soft enquiries do not impact your credit scores. You can check your credit scores for free with Wisr.

Why do I have more than one credit score?

Each credit bureau has its own scoring system. They assess different types of data over different durations, and as a result, they each produce slightly different credit scores. They should all be sitting around the same band, i.e. good, very good, excellent. If one is drastically different from another, that may be an indication of a reporting error. Check through your credit reports carefully and if you spot anything unusual or incorrect, contact the credit bureau right away.

Who can see my credit scores?

Unless you decide to share it with the world, chances are, only a select few people will ever see your credit scores. Your credit file is generally only accessed when you apply for a credit product, as well as a few other rare cases for employment or real estate purposes. Conducting a credit check on someone else is considered fraud and is treated as a serious offence.

Why do my credit scores matter to lenders?

Your credit scores indicate how well you manage your financial obligations. If a lender is thinking of giving you a loan, they want to be pretty sure that you’ll be able to repay it. Your credit score helps them decide whether or not you’re a safe bet. Other elements of your credit report including your repayment history and recent credit activity will also play a role in determining your eligibility. 

Curious to know more? Read our guide to credit scores.

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Disclaimer: This article contains general information only, and is not general advice or personal advice. Wisr Services does not recommend any product or service discussed in this article. You must get your own financial, taxation, or legal advice, and understand any risks before considering whether a product or service discussed in this article may be appropriate for you. We have taken reasonable efforts to ensure that the information is accurate at the time of publishing, but the information is subject to change. We may not update the article to reflect any change.

James is a marketing and communications professional with a passion for leading high-performance teams. He likes what he does… a lot.

James, Chief Growth Officer