Equifax’s Open Score uses banking data to create credit profiles for 2.5 million Australians without traditional credit histories.
or millions of Australians, the credit system has always been a catch-22: you need credit history to get credit, but you need credit to build that history.
Equifax Australia and Mastercard unveiled a solution that sidesteps this paradox entirely, using spending patterns and bank transactions to create creditworthiness scores for people the traditional system overlooks.
The new “Open Score” analyzes real-time banking data: income flows, expense patterns, even rental payments to generate a financial health score between 0 and 10. It’s designed for Australia’s 2.5 million credit invisible consumers: young adults, recent immigrants, and those re-entering the financial system after life disruptions.
How transaction-based scoring actually works
“By tapping into alternative data like income, expenses or rental payments, Open Score can uncover insights into consumers that aren’t available with traditional credit reporting information,” said Melanie Cochrane, CEO of Equifax A/NZ.
“These insights will assist all Australians, but will be especially powerful for consumers who have traditionally been credit invisible.” The system operates through Australia’s Consumer Data Right framework, requiring explicit consumer consent before accessing banking data. Users see not just their score, but the contributing factors that influence it, a transparency approach that Equifax says helps consumers understand and improve their financial position.
The system targets specific demographics that traditional credit scoring often excludes: young adults starting their financial lives, recent immigrants without local credit history, and individuals re-entering the credit market after disruptions. These groups may demonstrate financial responsibility through consistent income and bill payments, but lack the borrowing history that conventional scoring requires.
The partnership leverages Mastercard’s open banking infrastructure, which the company says ensures secure, real-time data sharing. “Open Score empowers Australians to use their own data more easily and securely to help improve financial literacy, manage budgets, and make more informed borrowing decisions,” said Brenton Charnley, Vice President, Open Banking, Australasia at Mastercard.
Beyond basic scoring, the system offers transaction alerts for unusual activity and includes a “Confidence Metric” indicating how reliably the score represents a consumer’s financial wellbeing. This multi-layered approach reflects growing recognition that traditional credit scores, based primarily on past borrowing behavior, may miss crucial indicators of financial stability.
Market pressures drive alternative credit assessment
The timing aligns with broader shifts in Australian finance. As buy-now-pay-later services proliferate and younger consumers delay traditional credit products, financial institutions are seeking new ways to assess risk and expand their customer base. Open Score represents a data-driven response to these market changes. Traditional credit bureaus face increasing pressure as alternative lenders like Afterpay and Zip capture market share without relying heavily on conventional credit checks. These services have demonstrated that transaction patterns and payment behavior can predict creditworthiness, creating competitive pressure on established players like Equifax.
The system also addresses regulatory expectations around financial inclusion. Australian regulators have consistently pushed for broader access to credit, particularly for groups historically excluded from mainstream finance. Open Score positions itself as meeting these policy objectives while generating new revenue streams from previously untapped consumer segments.
Privacy questions and implementation challenges
Yet the system raises significant questions about financial surveillance and algorithmic fairness. While consumers must consent to data sharing, the granular analysis of spending patterns from grocery purchases to entertainment expenses, represents unprecedented financial scrutiny. Critics argue that transaction-based scoring could introduce new forms of bias, potentially penalizing consumers for legitimate lifestyle choices. The effectiveness of algorithmic scoring based on transaction data remains unproven at scale. Unlike traditional credit scores with decades of performance data, Open Score’s predictive accuracy is largely theoretical. Early adopters essentially become test subjects for Equifax’s machine learning models, with limited recourse if scoring proves inaccurate or discriminatory.
Consumer advocates also question whether users truly understand what they’re consenting to when sharing banking data. The complexity of algorithmic scoring systems makes it difficult for average consumers to predict how their financial behavior will be interpreted and scored. For Equifax, the launch marks a strategic pivot toward alternative data sources as the credit industry evolves. The company positions Open Score as a stepping stone for underserved consumers, potentially creating a pathway to traditional credit products once users establish their financial profiles. However, whether this represents genuine financial inclusion or sophisticated customer acquisition remains to be seen.
If successful, Open Score could fundamentally alter how Australian lenders assess risk, potentially reducing reliance on conventional credit histories while introducing new forms of financial evaluation. The system’s real test will come when lenders begin incorporating these scores into actual lending decisions and when consumers discover whether their banking data truly translates into improved access to credit.
For more information, visit www.equifax.com.au or follow the company’s news on LinkedIn.
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