There are a number of things you can do to improve your credit score quickly, and other things you can do to improve it over a longer period of time. Before you get started: you need to check your credit score to see what your baseline is.
You can check your credit score for free through Finder. It takes a couple of minutes and then you'll know exactly what your score is. You'll get a score between 0 and 1,000. The higher the better.
Along with the score you'll get your credit report, which contains:
Once you have your credit score you can identify the best ways to increase it.
Look at the details contained in your credit report. If it all looks accurate, then jump to step 3. But if you find any errors you can get them corrected and your credit score should increase pretty quickly.
Here are some examples of possible errors:
You can request a correction on your credit report through the agency that issued the report. And you can contact the credit provider that made the mistake directly.
You'll need some personal identification, plus the report, the specific detail you're challenging and evidence of the error.
Fix the biggest issues dragging your credit score down as soon as possible. Red marks on your credit report are usually:
Prioritise paying off any outstanding debts, especially a default. Make sure you pay any missed payments before the 14 days if possible. Paying off an outstanding payment looks better on your credit report but the missed payment or default is still recorded.
It sounds obvious, but don't miss a payment on your credit card or loan. Pay off at least the minimum on your credit card before it's due.
🔥 Hot tip
Set up direct debits so payments are made automatically. Just make sure you have money in the bank account to cover the payment.
If you have a credit card you hardly ever use, a personal loan nearly paid off or any other debts you can pay out and close, doing so will instantly give your credit profile a boost.
This is because when you cancel a credit card, you're reducing the amount of overall debt you have access to. This is seen as a positive and may improve your credit score.
If you already have a credit card and you're making repayments on time, you can further improve your credit score by lowering the card limit. That's the maximum amount you can spend using the card.
It's much easier to get into financial trouble with a card that lets you spend $10,000 versus one with a limit of $2,000. If you don't need to make big purchases on your credit card, lower your limit and your credit score should increase by the following month.
Your credit record collects both positive data (all the years you've spent paying your phone, internet, electricity and gas bills on time) and negative data (late payments, defaults). When you pay your bills on time, you're building a positive credit score over time. Setting up direct debits for your bills (or even automatic reminders) is the easiest way to do this.
You might think someone who has never had a cent of debt to their name would have a perfect credit score. But that's not the case.
To prove you are a reliable borrower you need to actually have a history of managing debt responsibly. If you've never had a loan or credit card before it can be hard to show this. You can start to build your credit rating with a credit card.
Just make sure:
Having some debts is good – a borrower with a single credit card and a home loan who never misses a repayment is likely to have a strong credit score.
But if you have 3 credit cards and 2 personal loans, you may struggle to improve your credit score even if you never miss a repayment.
If you can cut down to 1 or 2 credit cards and consolidate your loan debts you can lift your score.
Alternatively, prioritising paying off one of the loans completely would help too. A balance transfer credit card can be the best way to roll card debts into one manageable debt.
Buy now pay later (BNPL) products like Afterpay might not seem like credit products. But using BNPL can harm your credit score.
Missing BNPL repayments will hurt your credit score. And some BNPL providers make a credit enquiry when you sign up, meaning the company takes a look at your credit report. This can impact your credit score too.
When you apply for a loan or credit card the lender requests a copy of your credit report. This is called a hard inquiry and it can negatively affect your report.
This is because multiple applications for credit in a short time are considered a bad sign.
To avoid this:
🔥 Hot tip
Getting rejected for a credit application hurts your credit score because of the hard inquiry mentioned above. Avoid applying for another credit product until you understand why you got rejected for the first one. Multiple inquiries can harm your credit score even more. Checking your own credit score is considered a soft inquiry and doesn't affect the score in any way.
| Response | |
|---|---|
| No | 68.8% |
| Yes | 31.2% |
Unfortunately there is no quick fix or shortcut to improving your credit score. If you have a poor score, it can often take time before you see a huge improvement in your credit rating.
However, by consistently following the steps above you should see your score gradually increase.
One exception may be if you have multiple errors in your credit report that are harming your score. Getting these corrected and removed from your report may have an immediate impact on improving your credit score. In the meantime:
If you've had a very bad run with your finances – missed payments, defaults, a bankruptcy – then time is your friend.
In Australia, defaults stay on your credit report for 5 years. Missed payments stay for 2. If you were declared bankrupt, the bankruptcy stays on your report for 2 years from the end date or 5 years from the date you became bankrupt (whichever of the 2 is later).
So while all the tips we've outlined above are very useful, for people with terrible credit the passage of time also helps a lot. Just avoid getting into more credit trouble in the meantime.
There may be mistakes on your credit report you can fix. And there are companies that offer credit repair services who can fix those for you.
But these companies can charge high fees and are often just doing things you can easily fix yourself, for free.
Paying off debts completely is good financial advice. But it's often worth keeping a credit card you rarely use and have always paid off on time. This card is a good example of your creditworthiness.
Just make sure you keep the limit as low as possible.
If you're struggling to make repayments and need financial help you have options:
Missing a phone bill can end up hurting your credit score, but simply having a mobile plan won't impact your credit report.
The average Australian has a "very good" credit score according to Finder analysis. Here's how credit scores are categorised in Australia, and how to check yours.
Credit reporting bureaus issue credit reports and scores to consumers and lenders. Discover how they work in this guide.
Placing a ban on your credit report can help to protect you from fraud. Here's how to request and extend bans with Experian, Equifax and ilion in Australia.
If you're planning to cancel a credit card, here's what you need to know about the impact it could have on your credit score.
Find out about different credit monitoring services that can keep you informed about changes on your credit report.
How to remove incorrect negative listings from your report and adopt positive money habits to get your credit history back on track.
How to remove enquiries from your report in 4 steps and a guide for improving your credit score.
Discover how you can use a credit card to build or repair your credit history.
How does the inquiries affect credit score? What’s the best way to improve credit score?
Hello Sam,
Thank you for your comment.
Each time you make an application for credit, it’s going to be listed on your credit file as a “credit enquiry”. Hence, enquiries can affect your score and it will stay there for five years. It will be listed regardless of whether the application is approved or not. Types of accounts you can make enquiries for are credit cards, personal loans and even utilities such as phones, gas and electricity.
You may refer to our guide to improving your credit score. You can see on the page the tips on how to improve your score and how it’s calculated. I hope this helps.
Should you wish to have real-time answers to your questions, try our chatbox on the lower right corner of our page.
Regards,
Jhezelyn
I have been repaying a bank loan for the past few months and I was under the impression that my credit score would slowly increase every time I made my monthly repayment but this hasn’t happened. Is that supposed to happen? Also, does my credit score increase by many points when the loan is finally paid off? One last question – what would make my credit score increase higher – if I let the loan continue for the 3 year period and make monthly repayments on time OR pay it off early with a lump sum after about 6 months? I hope you can answer these questions for me. I look forward to your reply. Thank you.
Hello Joanne,
Thank you for your comment.
Making repayments on time can definitely improve your credit score. Your ongoing repayments are listed on your credit report. Making additional repayments can also be a good option to consider because it will let you pay off your loan ahead of schedule, then your score will improve when the account closes. Please note that 2 years of your repayment information is listed on your report.
To improve your credit score, best to keep an eye on your credit report and check your credit score regularly. You can see some credit activities and their effect on your Experian credit score. I hope this helps.
Should you wish to have real-time answers to your questions, try our chatbox on the lower right corner of our page.
Regards,
Jhezelyn
Hi am I able to remove paid personal loans? And I see a lot of enquiries iv made that I didn’t proceed in am I able to get them removed to improve my credit score
Hi Lynken,
Thanks for leaving a question on Finder.
You can have the paid personal loans in your account if you contact the lender to have it updated or removed. However, you can’t remove a legitimate enquiry from your credit file. In most cases, you will simply have to wait until the five years has passed and they are taken off your history.
In general, the only details that can be removed from your credit file are those that are incorrect or erroneous – for example, if a lender made an enquiry without proper authorisation from you, if your name was attached to an account you never opened, or if an account was incorrectly listed as “in default”. In these cases, you can submit a request to have the incorrect details removed from your file.
We have detailed the steps on how to fix a mistake on your credit file.
Cheers,
Joel
I am on the aged pension. I have not had any credit cards/ loans etc for about 15 years. Recently applied for a car loan and was rejected. I own my own home and have no debts. So probably have no Credit score??
Hi Annie,
Thanks for leaving a question on Finder.
The first thing you need to determine is if you indeed have a credit score. Lenders have different eligibility criteria in approving a loan and credit score is one of them.
Knowing your credit score and your credit report will give you a good understanding of your financial situation and help you feel more confident when making decisions about your money. Plus, in the near future, your credit score will become more and more important to any loan applications that you make.
Cheers,
Joel
I would like to update my work information to better help my credit situation.
Hi Aaron,
Thank you for your comment.
There may be no need to contact the credit bureaus to update the personal information on your credit report.
You may need to get in touch with your creditors and ask them to update your records with your new address, name, or employer. When your creditors send their monthly updates to the credit bureaus, they’ll include your new information and then your credit report will be updated.
Creditors generally only report once a month, so it could take about 30 to 45 days for the changes to reflect. You can also check our credit file guide to know everything you need to know about your credit report. I hope this helps.
Regards,
Jhezelyn