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.
Hello,
I purchased a home 7 months ago, I have a mortgage yet this is not listed on my credit file , why is this so ?
Hi Paul,
Thanks for your inquiry
There are several reasons why your mortgage may not appear on your credit report, including:
1. Lender not reporting: Some mortgage lenders – especially smaller firms – do not always report mortgages to the credit bureaus, unless there is a problem. This means, your good payment history will not show up, but any late or missed or late payments could appear.
2. Clerical errors: Mistakes happen. A human or computer error could cause your mortgage from not appearing. All it takes is an error on one digit of your Social Security number or any other small mistake that can keep your mortgage from the report.
3. Non-traditional financing: If you borrow directly from and are paying your home’s previous owner (rent-to-own agreement) or if you use some other form of non-traditional lending, your mortgage most likely will not appear on your credit report.
4. Bankruptcy: Filing for Chapter 7 bankruptcy wipes out all debt allowed by federal law. If a reaffirmation agreement is not signed, your mortgage may not appear on your credit report.
5. Delay in reporting: It typically takes 30 to 60 days after you sign your mortgage paperwork for it to appear on our credit report. Processing delays during busy seasons could delay this even longer.
6. Name not on mortgage: If you and your spouse bought a home, but only your spouse’s name appears on the mortgage for financing reasons, the mortgage will not appear on your credit report.
If your mortgage is not appearing on your credit report, you might be able to get it added. You cannot submit your mortgage yourself, but you can check for clerical errors and ask your lender to correct them.
If your lender does not report your mortgage to any of the credit bureaus, you cannot force them to do so. However, if you are trying to get a new mortgage, you can present your prospective lender with evidence of the loan and your payment history.
Hope this information helps
Cheers,
Arnold
Hello,
I have a credit score of average (591 out of 1200) and I have now obtained my credit report. I do not have any defaults or bankruptcy’s in my credit file, only enquirys so would like to know why my credit score is so bad?
Thank you
Hi Lucy,
Thank you for getting in touch with finder. Credit enquiries, or loan applications, are not necessarily bad, but having numerous enquiries listed in a short period of time can be. Generally, applying for credit once every three months will not contribute to a lower score. If you spot an error, get in touch with the lender in question and ask it them to rectify the mistake. If you’re not happy with the way the lender handles this, you can always get in touch with the relevant Ombudsman service.
I hope this helps.
Have a great day!
Cheers,
Jeni
I would like to know why I have such a terrible credit score and how I repair it
Hi Rebecca,
Thank you for getting in touch with finder. Missed repayments, loan defaults, debt agreements and bankruptcy details are collected by credit-reporting agencies and can all feature in your credit file. The agencies then use this information to calculate your risk as a borrower, with this risk reflected as a credit score. To check why you have a bad credit score you can order a copy of your credit file from one of Australia’s three main credit reporting agencies: Equifax, Dun & Bradstreet or Experian. To repair your credit score there are some steps that you can do like getting a copy of your credit file and monitor your credit score from time to time, fixing any incorrect listings, taking control of your debt, staying on top of repayments, avoiding making multiple credit applications and contacting the National Debt Helpline on 1800 007 007 to find free financial counselling in your area. Financial counsellors offer independent expert advice on how you can manage your money and eliminate debt.
I hope this helps.
Have a great day!
Cheers,
Jeni
How do I get a list of defaults etc so I can improve my credit rating?
Hi Joely,
Thank you for your comment.
You may request a free credit report to see everything about your financial history. Note that this may take up to 10 days to receive your credit report. You may also refer to our guide on how to remove defaults under your name.
Regards,
Jhezelyn
I would like to know why my credit rating is so bad. I was bankrupt around 10 years ago but since then I have always paid everything on time, had a car loan for $31,000 have paid that back. I have a couple of small loans out that I always pay on time, have worked for the same company for 28 years. I’m confused as to why my credit rating is so bad? Thanks.
Hi Kevin,
Thank you for your comment.
You can access a free credit report to know how you got that certain credit rating. You can also learn the factors that can cause bad credit rating.
Moreover, if you wish to have your credit score repaired, you may refer to our complete guide to credit repair.
Hope this helps.
Regards,
Jhezelyn