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.
Hi, silly me when I had no idea about credit scores and things that negatively impact it – applied for a few “money fast” personal loans and now have the enquires on my file which I feel is negatively impacting my score. Is there anything I can do to have enquires removed?
Hi Connor,
Thanks for getting in touch.
You can remove credit enquiries if they were erroneously listed on your credit report. Otherwise, you will have to wait until five years have passed. After this, they are removed from your history. See our guide on what is a credit enquiry and things you should do if you have a lot of them.
Hope this was helpful. Don’t hesitate to message us back if you have more questions.
Cheers,
Nikki
My question is how am I supposed to consolidate my finances if my credit score for some reason is showing weak still. Bankwest have pointed out to me that NAB have been ripping me off and can not only loan me more money to consolidate my loan, however the repayment would still be less than what NAB slug me even with a higher amount of loan. I earn enough money to be eligible, I pay my rent on time always and yet cannot get a loan still?
Hi Micheal,
Thanks for your inquiry.
A debt consolidation is one way to manage repayments and reduce debt if you have more than one account you’re paying interest on. Usually, lenders will require you to have a good credit history to take out one of these loans. However, there are lenders out there who will approve debt consolidation loans for those with bad credit.
You may consider applying for an unsecured personal loan with a specialist lender. Some lenders offer large, unsecured personal loans to people with bad credit. Alternatively, you may also consider a Part 9 Debt Agreement. These are debt agreements, which are a form of bankruptcy, are an option for people with large debts they are unable to repay.
Hope this information helps
Cheers,
Arnold
Hi i have received my credit file/ report which does not indicate anything outstanding/owing against my name, i however have 7 credit enquiries and is still being refused loans etc. My credit score is sitting below average. Im not sure how does this still affect my borrowing power seeing as i dont owe anyone money. The 7 credit enquiry i have are from avenues I’ve been rejected from. So im pretty lost on how this work.
Hello Margaret,
Thank you for your comment.
Sorry to hear you’re in this situation. By the way, the number of credit inquiries you’ve made can affect your credit score especially if these applications are done in a short space of time. You may want to check the factors affecting your credit score.
Also, kindly check our guide to improve your credit score. I hope this helps.
Regards,
Jhezelyn
I applied to a bunch of places for credit card or small loan and thought my score wouldn’t be affected! What can I do about that? It was good according to a report I had awhile ago, I need financial help to go forward and get ahead.
Hello Celia,
Thank you for your comment.
Firstly, you may need to obtain a credit report, this document explains why you got a certain score. Please note that it may take up to 10 days for you to receive your credit report after requesting it.
Regarding your quest to look for financial help, you have the option to contact the financial counselling hotline which is a free service. You can also head to Service Australia’s crisis and special help page for emergency financial assistance options. I hope this helps.
Regards,
Jhezelyn
I have a couple of issues where I disagreed with money owed for alleged services, and I refused to pay them, and I had, in the case of a health club fees, a Doctors certificate which was ignored. Another, I paid about $700 , for building leads that amounted to nothing, so I cancelled my direct debit to them, but they insisted I owed them money.
How is it these companies can discredit me weather they are right or wrong ?
Do I need legal action ( more cost, for no reason ) ?
Cheers John
Hi John,
Thanks for your message and for visiting Finder.
Sorry to hear that you ran into a few hiccups.
Generally, you can only request for a listing to be removed if it was erroneously listed on your credit report. Check our guide to understand how a credit score works. In your case, you can seek assistance from a credit repair company. They use credit legislation to determine whether negative listings on your file were put there without a credit provider adhering to the relevant laws. Please refer to our credit repair guide to know the process.
Hope this helps! Feel free to message us anytime should you have further questions.
Cheers,
Nikki