If you’ve ever applied for a car loan, personal loan, credit card, or even a phone plan, a credit check was almost certainly part of the process. Most people know they exist. Fewer people know what’s actually in them, how lenders use them, or what to do if theirs isn’t great.
Before you put in your next loan application, it’s worth taking five minutes to understand how the credit check process works. Knowing what’s on your credit file, and how lenders read it, puts you in a much better position to apply with confidence.
What Is a Credit Check in Australia?
A credit check is when a lender, broker, or other authorised organisation accesses your credit report to understand your history with debt. It gives them a picture of how you’ve managed credit in the past, which they use to assess whether you’re likely to manage new credit well in the future.
In Australia, credit data is held by two main credit reporting bodies:
- Equifax: the largest bureau, used extensively by banks and major lenders. Scores run from 0 to 1,200.
- Experian: commonly used by non-bank lenders, fintechs, and some telcos (Experian absorbed Illion in recent years). Scores run from 0 to 1,000.
Each bureau independently collects data and runs its own scoring algorithm. It’s completely normal to have a different score at each one. They may hold different information and weight factors differently.
What’s on Your Australian Credit File?
Since Australia moved to Comprehensive Credit Reporting (CCR) in 2018, your credit file captures both positive and negative information, not just the bad stuff. That’s good news for consistent borrowers, because on-time repayment history now works in your favour.
| What IS on your credit file | What is NOT on your credit file |
|---|---|
| Personal details (name, DOB, address, employer) | Your income or salary |
| Credit enquiries (every application you’ve made) | Your savings account balance |
| Current and closed credit accounts | Your employment status |
| Repayment history (on-time, late, or missed) | Utility payment history (unless defaulted) |
| Defaults and overdue amounts | BNPL payments (unless missed; rules changed June 2025) |
| Bankruptcies, court judgements, debt agreements | Your relationship status or dependents |
| Financial hardship arrangements | How much you spend each month |
Here’s how long different items typically stay on file:
- Credit enquiries: five years
- Defaults: five years from the date recorded
- Serious credit infringements (such as fraud): seven years
- Bankruptcy: two years after discharge, or five years from the date of entry, whichever is longer
- Financial hardship arrangements: removed within 12 months, and they don’t affect your score
Hard vs. Soft Credit Checks: What’s the Difference?
Not every credit check is the same. There are two types, and they have very different effects on your credit file.
When does a hard credit check happen?
A hard credit check is triggered when you formally apply for credit: personal loans, car loans, credit cards, phone plans, and utility accounts. Hard credit checks are recorded on your file and are visible to other lenders.
According to Equifax, a hard credit check can stay on your report for up to five years. The impact on your score is usually modest for a single enquiry, but multiple hard checks in a short period is a different story.
Here’s something worth knowing from the broker side of the desk: if you apply to four or five lenders separately in a short window, each one runs a hard credit check. Other lenders can see all of those enquiries, and a cluster of applications can signal financial stress, even if that’s not your situation at all.
What’s a soft credit check?
A soft credit check happens when you check your own credit score, when a lender runs an eligibility screen before you formally apply, or when a broker reviews your file to match you with the right lender. Soft credit checks don’t affect your score and aren’t visible to other lenders.
Many lenders now offer a soft check pre-qualification step so you can get an indication of your options before a hard enquiry is recorded.
How to Get Your Free Credit Report in Australia
You’re entitled to a free copy of your credit report from both Equifax and Experian every three months under Australian law. No catch, no credit card required. Running a credit check on yourself this way is a soft check, so it won’t affect your score. ASIC’s MoneySmart has more detail on how to access both.
It’s worth checking both bureaus, not just one. Because each holds slightly different data, a default might appear on your Experian file but not your Equifax file, or vice versa.
When you get your report, look for these three things:
- Credit enquiries you don’t recognise: these can be a sign of identity fraud.
- Defaults or overdue accounts listed incorrectly: credit providers must follow specific legal steps before listing a default. If they didn’t, the listing may be invalid.
- Outdated information: items that should have aged off the file after five or seven years.
If you find an error, lodge a dispute directly with the relevant bureau. Legitimate errors are more common than most people realise, and incorrect listings can be removed if the proper process wasn’t followed.
What Do Lenders Actually Look at When They Run a Credit Check?
Your credit score is part of the picture, but it’s rarely the whole story. What we see in practice is that most lenders are running a broader assessment alongside the credit check. Here’s what that typically includes:
- Your income and regular expenses
- Existing debts and repayment commitments
- Employment stability
- The size of the loan relative to your income
Your score tells them about your history. The rest of the assessment tells them about your current capacity to repay.
Different lenders also have very different credit appetites. A major bank typically applies tighter score thresholds than a specialist non-bank lender. Lenders on Yes Loans’ panel, including Pepper Money, Money3, and Sovereign Credit, are set up to work with applications that don’t fit a bank’s standard criteria. The same application a bank declines can be a straightforward approval with the right lender.
If you’re thinking about car finance, a secured loan can actually work in your favour when your credit score is imperfect. Because the vehicle acts as security, the lender’s risk is lower, and they can sometimes offer more flexible terms than on an unsecured product.
Can You Get a Personal Loan with a Less-Than-Perfect Credit Score?
The short answer: it depends on the lender, the loan amount, and your overall financial picture. A lower credit score doesn’t automatically close the door, but it does change who you should be applying with.
A credit check that knocks you back at one lender won’t necessarily get the same result at another. What generally helps your application:
- Stable income history
- Manageable existing debts
- An accurate application that reflects your real situation
- Applying to lenders who specialise in complex credit files
This is where going through a broker makes a real practical difference. Rather than applying to one lender at a time and racking up hard enquiries on your file, our brokers review your situation against our panel and match you with the lenders most likely to say yes. We work harder to say yes more often. And when something doesn’t fit the first lender, we work through the panel until we find a structure that does.
Take a look at our personal loans page, or use the loan calculator to get a sense of repayments before you apply. For amounts under $5,000, our referral partner MoneyBuddy may be a better starting point.
FAQs: Credit Checks in Australia
Does checking my own credit score affect it?
No. Running a credit check on yourself is a soft check and has no impact on your score. You can check as often as you like through Equifax or Experian without any effect on your file. It’s a good habit before a major loan application.
How long does bad credit stay on my file in Australia?
It depends on the type of listing:
- Defaults: five years from the date recorded
- Serious infringements: seven years
- Bankruptcy: two years after discharge or five years from date of entry, whichever is longer
- Regular credit enquiries: five years
Can I get a loan approved with a default on my file?
Possibly, yes. It depends on the lender, how old the default is, the amount, and whether it’s been paid. Specialist lenders are far more willing to work with impaired credit files than mainstream banks. If you’ve been knocked back elsewhere, it’s worth talking to a broker before assuming your options are exhausted. A debt consolidation loan is also worth considering if multiple debts are contributing to your credit situation.
What’s the difference between a credit report and a credit score?
Your credit report is the full document: it contains your personal details, every credit enquiry, your account history, repayment records, and any adverse listings. Your credit score is a single number calculated from that report. Lenders typically look at both: the score gives them a quick read, the report gives them the detail.
What if there’s an error on my credit file?
Contact the bureau directly with supporting documents. Under Australian privacy law, credit providers must follow specific steps before listing a default, including sending written notices within defined timeframes. If those steps weren’t followed, the listing may be invalid and removable. Errors are more common than most people expect.
Key Takeaways
- Australia has two main credit reporting bodies: Equifax and Experian. Having a different score at each is completely normal.
- Your credit file captures both positive and negative information under Comprehensive Credit Reporting, introduced in 2018.
- Hard credit checks (triggered by loan applications) are visible to lenders and can affect your score. Soft credit checks don’t.
- Multiple hard enquiries in a short period can make your file look riskier than your actual situation. Applying through a broker means one assessment across a panel, not four or five separate hard checks.
- You’re entitled to a free credit report every three months from both Equifax and Experian. Check before a major application.
- A lower credit score narrows your options but doesn’t close them. The right lender match matters more than most people realise.
Chat to one of our brokers on (08) 9472 3000 or explore our personal loans page to see what’s available for your situation. You can also visit our FAQs for more on how the application process works.
Yes Loans (ACL 392426) is a finance broker, not a direct lender. Credit decisions are made by the lender, subject to assessment.
