What Affects Your Credit Score in 2026

What Impacts Your Credit Score in 2026

Repayment History – Very High Impact

Your repayment history is one of the biggest factors affecting your credit score.

Repayment History Information (RHI) has become increasingly important under Australia’s Comprehensive Credit Reporting (CCR) system.

Lenders can see whether you’ve made your repayments on time over the previous 24 months.

Consistently paying your:

• Home loan
• Car loan
• Personal loan
• Credit card
• Business loan

On or before the due date demonstrates responsible financial behaviour.

Even if you’re only making minimum repayments, paying them on time is generally far better than paying late.

Why it matters

A strong repayment history helps improve your credit profile because it shows lenders you’re reliable.

Repeated late payments can have the opposite effect.

Credit Applications – High Impact

Another major factor that affects your credit score is how often you apply for credit.

Every time you apply for:

• A credit card
• Personal loan
• Car loan
• Buy Now Pay Later account
• Mortgage
• Store finance
• Payday lenders 
• Commercial credit & finance

An enquiry is recorded on your credit report.

Why too many applications can hurt

Making several applications over a short period may suggest you’re experiencing financial stress or urgently seeking credit. This may increase your risk of missing payments in the eyes of possible creditors

Regardless if your application is approved or declined, the enquiries themselves remain visible on your report for 5 years.

This is one reason people searching what impacts credit score are often surprised to discover that simply applying for credit can reduce their score.

Note: Applications for & habits of applying for risky creditors can also impact risk and therefore creditworthiness.

Creditors such as those who offer payday loans and applications for small amounts of credit are some examples of high-impact enquiries that can reduce someone’s creditworthiness.

Existing Debt Levels – Medium Impact

How much money you already owe can also affect your credit profile.

Lenders look at:

• Current loan balances
• Available credit limits
• Outstanding debts
• Total financial commitments

Even if you rarely use your credit card, a very high credit limit may increase your overall credit exposure.

Many lenders consider both:

• Your current debt
• Your potential borrowing capacity

Reducing unnecessary credit limits may improve how future lenders assess your application.

Defaults – Very High Impact

One of the most significant things affecting your credit score is having a payment default listed on your credit report.

A default may be recorded when a debt remains unpaid after meeting the legal requirements for notification.

Examples include:

• Unpaid credit card debt
• Personal loans
• Utility bills
• Phone accounts
• Some rental-related debts where legally reportable

Defaults can significantly reduce your credit score and will remain on your credit report for 5 years.

In Australia, paying your default does not remove it & you will still be marked as having bad credit.

Serious Credit Infringements – Very High Impact

A serious credit infringement (SCI) is one of the most damaging listings that can appear on your Australian credit report. Fortunately, they are relatively rare and only apply in specific circumstances.

Unlike a standard payment default, a serious credit infringement generally indicates that a person has deliberately attempted to avoid their obligations to a credit provider.

Examples may include:

• Intentionally providing false contact details to avoid being contacted by a lender.
• Leaving your last known address without informing the credit provider while still owing money.
• Deliberately avoiding communication after repeated attempts by the lender to recover an overdue debt.
• Taking active steps to evade repayment of a debt.

A serious credit infringement is not recorded simply because you’ve missed a few repayments or are struggling financially. Credit providers must meet strict legal requirements before they can list one on your credit report.

Once on your credit report, a serious credit infringement stays on your credit report for 7 years.

Court Judgments – Extremely High Impact

If a debt remains unpaid for an extended period, a creditor may decide to take legal action to recover the money owed. If the court rules in the creditor’s favour, a court judgment may be issued confirming that you are legally required to repay the debt.

For example, a court judgment may:

• Lead to enforcement action to recover the debt.
• Result in additional legal costs being added to the amount you owe.
• Increase the likelihood of a payment default remaining unresolved.
• Be considered by some lenders during the loan assessment process if disclosed or discovered through other checks.

Bankruptcy and Insolvency – Extremely High Impact

One of the largest factors affecting any credit score is insolvency.

This includes:

• Bankruptcy
• Debt agreements
• Personal insolvency agreements

These events remain on your credit file for 5 years and can make obtaining finance considerably more difficult.

Many lenders have strict lending policies regarding previous bankruptcies.

Often times Bankruptcy will exclude the credit score or provide a negative credit score, which reflects the severity of the current situation.

Length of Credit History – Medium Impact

Your credit history doesn’t just look at what’s happened. It also considers how long you’ve been using credit.

Someone who has responsibly managed credit accounts over many years often appears less risky than someone with a very limited credit history.

Tip: Closing every credit account isn’t always beneficial.

Instead, maintaining older accounts in good standing may contribute positively to your overall credit profile.

Number & Types of Credit Accounts – Low Impact

Lenders also consider the types of credit you’ve previously managed.

These may include:

• Home loans
• Personal loans
• Credit cards
• Car finance
• Business lending

Successfully managing different forms of credit over time can demonstrate financial responsibility.

Comprehensive Credit Reporting (CCR) – Medium Impact

Since the introduction of Comprehensive Credit Reporting in Australia, lenders now have a much more complete picture of your borrowing behaviour.

Instead of only seeing negative events like defaults, many lenders can also view positive information, including:

• On-time repayments
• Account opening dates
• Credit limits
• Account status

This means consistently making repayments can help strengthen your credit profile over time.

Incorrect Information on Your Credit File – Impact Varies

Mistakes on your credit report can negatively affect your credit score and potentially reduce your chances of being approved for finance. While credit reporting bodies and credit providers aim to keep records accurate, errors can sometimes occur.

Common examples of incorrect information include:

• A payment default that has been listed in error.
• A debt that has already been paid but still appears as outstanding.
• Credit accounts that do not belong to you due to identity theft or a reporting error.
• Incorrect repayment history information.
• Duplicate credit accounts or duplicate defaults.
• Credit enquiries that you did not authorise.
• Personal details that are inaccurate or outdated.

How can incorrect information impact your credit score?

The impact depends on the type of error.

For example, an incorrect payment default or missed repayment history information could significantly lower your credit score, while an incorrect address is unlikely to have any effect.

Because lenders rely on the information in your credit report when assessing loan applications, even a small error may influence how they view your creditworthiness.

What should you do if you find an error?

If you believe information on your credit report is inaccurate, you have the right to request a correction.

You can:

• Contact the credit provider that supplied the information.
• Contact the credit reporting body holding your credit report.
• Provide any supporting documents that demonstrate why the information is incorrect.

Both the credit provider and the credit reporting body are required to investigate correction requests and, if the information is found to be inaccurate, incomplete, out of date, misleading or incorrectly recorded, it should be corrected.

If the matter cannot be resolved directly, you may be able to lodge a complaint with the credit provider’s external dispute resolution scheme or the Australian Financial Complaints Authority (AFCA).

Regularly reviewing your credit report can help you identify mistakes before they affect important financial decisions, such as applying for a mortgage, personal loan or credit card.

If you discover an incorrect listing, addressing it as soon as possible may help prevent unnecessary damage to your credit profile and improve your chances of being approved for credit in the future.

What Doesn’t Affect Your Credit Score?

Many Australians worry about things that actually have little or no direct impact on their credit score or hear myths about what does or doesn’t impact their credit score.

The most common generally include:

• Your income: Earning a high salary doesn’t automatically increase your credit score. Income affects borrowing capacity rather than your credit rating.
• Your savings balance: Having money in the bank is financially beneficial, but it doesn’t directly improve your credit score.
• Your age: Your age alone isn’t used to calculate your credit score. However, older borrowers often have longer credit histories.
• Checking your own credit report: Many people ask whether checking their own credit score lowers it. The answer is no. Accessing your own credit report is considered a consumer enquiry and does not reduce your credit score.
• Decline notices: If a lender rejects your application, the rejection itself isn’t explicitly written on your file. However, the hard enquiry you made to apply is visible, and lenders can easily put two and two together if they see an enquiry followed by no active account being opened.

Hidden Factors: What Else Is Affecting My Credit Score?

Many Australians are surprised to learn that everyday habits they consider harmless are quietly pulling down their financial standing. Let’s look closer at the lesser-known culprits behind what is affecting my credit score inquiries.

The Hidden Trap of Buy Now Pay Later (BNPL)

For a long time, BNPL platforms operated in a regulatory grey zone. That era is completely over. Today, BNPL providers run hard credit checks when you sign up, and they report late payments directly to the credit bureaus. If you frequently miss your weekly or fortnightly instalments on consumer retail purchases, it actively damages your primary credit file just as much as missing a credit card payment would.

Credit Limits vs. What You Owe

In Australia, lenders look closely at your total credit capacity. If you have three credit cards with a combined limit of $30,000, lenders assess you as if those cards are completely maxed out, because you have the legal right to spend that money tomorrow.

Having massive amounts of unused, open credit available can lower your overall score and severely restrict your borrowing power when applying for a home loan.

Joint Accounts and Linked Credit Financial Risks

When you sign a credit contract with a partner, spouse, or business associate, your credit files become fundamentally linked for that specific account. If your co-borrower falls behind on repayments or defaults on that joint loan, it damages your credit score alongside theirs. Your personal financial responsibility cannot shield you from a co-signatory’s poor choices.

How Many Points Will I Gain or Lose If…

Australian credit reporting bodies Equifax and Experian do not publish exact point deductions or percentage weightings for individual credit events. Assigning arbitrary point values (e.g. “-25 points” or “-100 points”) would be speculative and potentially misleading.

The examples below are illustrative only and are intended to demonstrate the relative impact different events may have on a person’s credit score based on our experience here at Credit Wipe.

The actual effect depends on your overall credit history, the severity of the event, and the scoring model used by the credit reporting body.

• One credit enquiry – Very low – zero impact:
  Applying for credit or finance is normal. Your credit risk profile is looking for habits and signs of good or risky behaviour. One enquiry may not affect your credit rating at all, so long as it’s not with a high-risk lender.
• Multiple credit enquiries in a short period – High negative:
  Applying for five credit cards within two months may signal financial stress to lenders and have a greater impact than a single enquiry.
• One missed repayment – Medium to High negative:
  Missing a loan or credit card repayment may affect your repayment history, particularly if it becomes overdue long enough to be reported.
• Consistently paying on time for 24 months – Medium positive:
  Demonstrating a strong repayment history under Comprehensive Credit Reporting can gradually strengthen your credit profile.
• Defaults – Very High Negative:
  An unpaid debt that becomes a default can significantly reduce your credit score and remain on your credit report for 5 years. Paying the debt will not remove the default and will continue to reduce your risk & credit score.
• Serious Credit Infringement (SCI) – Very High Negative: Deliberately avoiding repayment or contact with a credit provider may result in one of the most severe negative listings on your credit report. This will remain on your credit file for 7 years.
• Bankruptcy or debt agreement – Very High Negative:
  Insolvency events are among the most serious credit events and can make obtaining finance much more difficult. The bankruptcy and/or Part 9 event will remain on the credit file for a minimum of 5 years and often affects candidates for longer if particular terms are not adhered to.
• Paying off a personal loan-  Low to Moderate Positive:
  Successfully repaying a loan demonstrates responsible borrowing, although the improvement to your score is usually gradual rather than immediate.
• Reducing high credit card balances – Low to Moderate Positive:
  Lowering your overall debt can improve how lenders assess your financial position, even if the effect on your credit score is gradual.
• Closing an unused credit card – Varies Positive:
  Reducing your available credit may improve your overall lending profile, although the direct effect on your credit score varies.
• Default Removed from Credit Report – Very High Positive:
  If a default is removed from your credit report, your credit score may improve significantly, depending on your overall credit history.
• Identity theft listing removed – Potentially High positive:
  Removing fraudulent credit enquiries or accounts can help restore your credit profile if they were affecting your score.
• Checking your own credit report – No Impact:
  Accessing your own credit report or score does not affect your credit rating in Australia.

Myth: Payment History Is Worth 35%, and Credit Utilisation Is Worth 30%

If you’ve been researching what affects your credit score, you’ve probably come across articles claiming that:

• Payment history = 35%
• Credit utilisation = 30%
• Length of credit history = 15%
• Credit mix = 10%
• New credit = 10%

While these percentages are widely shared online, they do not apply in Australia.

These figures come from the FICO® Score model used by many lenders in the United States. FICO is a proprietary credit scoring system developed specifically for the US credit market and is not used by Australian credit reporting bodies.

Why is this a myth in Australia?

Australia has its own credit reporting system, known as Comprehensive Credit Reporting (CCR), and our major credit reporting bodies, Experian and Equifax, use their own proprietary scoring models.

None of these organisations publicly disclose:

• The exact percentage weighting of each factor.
• How many points each credit event adds or subtracts.
• The formulas or algorithms used to calculate your credit score.

This means there is no official Australian equivalent to the 35%, 30%, 15%, 10%, 10% breakdown often quoted online.

Experian and Equifax’s own proprietary scoring models have more factors and can vary depending on your individual credit history. For example, a new default may have a much greater impact on someone with a previously excellent credit history than on someone who already has several adverse listings.

Why do so many websites still use the US percentages?

Many Australian websites simply republish overseas articles or use AI-generated content based on American sources without adapting it for the Australian credit system.

As a result, you’ll often see references to 35% payment history or 30% credit utilisation, even though Australian credit reporting bodies have never published these figures.

When researching your credit score, it’s always best to rely on information specific to Australia’s credit reporting framework rather than advice based on overseas scoring models.