Credit agencies in Australia use your history of borrowing, applying for, and repaying credit to determine your personal credit score number.
Credit scores range from 0 to 1,000 or 1,200, with 1,000 and 1,200 being excellent scores. If you have a low credit score, you may be able to improve it over time by taking a few simple steps.
Here are the fastest ways to improve or rebuild your credit score.
The first step toward fixing your credit score is knowing what it is. Check yours and view your credit report for free and without any impact on your credit score with Money Matchmaker®.
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Your score won't be negatively affected and we protect your data with encryptions.
See what parts of your credit report are negatively, or positively, affecting your score.
Go through your credit report and check for any incorrect items.
These might include a double listing of debts, or debts that aren’t yours. Contact the credit reporting agency or the credit provider to clear up any errors.
If after checking your credit report you find inaccuracies or double listings contact the relevant credit provider to request that the listing be removed or amended.
If the credit provider refuses you can submit a request to have the listing removed with the credit reporting agency.
If you’re finding it difficult to manage your credit score and debts, you’re not alone - the majority of Australians have struggled with debt at some point in their lives.
Your first option is to contact your credit provider and ask for help with financial hardship. They may be able to adjust your loan and/or repayments to make it easier to repay.
You can also call the National Debt Helpline on 1800 007 007. They offer free, independent financial counselling that could help you create a budget and sort out your debt.
Always remember that there is help available for you if you need it, and seeking professional advice can be the first step toward fully understanding and resolving your situation.
Once you’ve sought financial advice and reviewed your credit report to resolve any inaccuracies, it’s time to start paying down your most significant debts to repair your credit score.
First, check to see if you have any outstanding defaults to credit providers. If you have defaulted on any payments to credit providers, paying them in full may improve your credit score.
We’ve talked about how to pay off credit cards before, but the most crucial aspect in quickly rebuilding your credit score is to make sure you do not miss payments, and that you repay the amount accruing the greatest interest first.
By doing this, you’ll start to chip away at the heavier interest charges that will make repaying all of your other debts (and meeting your remaining repayments on time) significantly easier.
The fastest way forwards is to stop yourself from going backwards.
Unless you’re looking at consolidating your existing debts or moving outstanding credit card balances to a new, more-beneficial card, there are two core reasons you shouldn’t apply for more credit if you don’t truly need it:
In most cases, you’ll still be able to borrow money if you have a bad credit score but lenders may charge you higher interest rates and fees.
If your credit score is very bad you may only be able to borrow from a lender who specialises in bad credit loans.
While it’s not the fastest way, it’s certainly the best - making sure you always meet your regular repayments on bills, loans, and other outstanding debts will ensure your credit score continues to rise.
It won’t happen overnight, but the longer you do this, the faster your credit score will improve. Think of it as compound interest for your credit score.
If you do need to borrow money, consider building a closer relationship with your bank.
Most banks won’t offer their regular, normal customers assistance unless it’s asked for, but people often forget that banks themselves are essentially a business, and benefit from you being a customer.
While it’s not as serious as repaying your loan debts, making sure you meet your utility payments is vital to rebuilding your credit score.
Defaults you make on these payments may be listed on your credit report - so don’t let your smartphone bill set back months of credit building.
Your total available credit (the amount available to you in credit cards, overdrafts etc.) is essentially a test of how well you can manage your money.
If you’re relying solely on your overdraft or your credit card, you’ll have less chance of rebuilding your score than if you show responsible use of credit where suitable - in other words, make sure you apply and use the right type of credit for your situation!
Money.com.au aims to clear up the confusion around rates, fees, repayments and approval, so we can provide the best consumer experience possible.
Australians could save thousands of dollars by consolidating their existing debts and streamlining their repayments.
Compare debt consolidation loans from our list of lenders today to see how much you could save.
No hidden fees, no inflated rates, no stress, and no impact on your credit score.
Shaun is the founder of Money.com.au and is determined to help people pay as little as possible for financial products. Through education and building world class technology. Previously Shaun co-founded CarLoans.com.au and Lend.