Five ways to improve your credit rating

Concerned about your credit history? Here are some practical ways to boost your credit score going forward.

Your credit file may be something that stays with you for the rest of your life, but it doesn’t need to be a burden. Ultimately, you have control over it. Even if your credit history isn’t great now, it’s never too late to learn how to improve it. With some time, your credit rating can become stellar and you can look forward to quicker credit card approval or having that big home loan a lower interest rate.

What are the five ways to improve your credit rating?

1. Keep your credit report in order.

Maintaining a good credit score will allow you to apply for credit cards and loans with confidence.

While there are certainly other things you can do to improve your credit rating, such as having a variety of credit options or keeping accounts open even when you’re not using them to improve your credit utilisation ratio, the five tips here are the primary principles for crafting a good credit reputation. After all, since you can’t run away from this credit rating business, you might as well do everything you can to face it with a big smile.

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2. Have an active credit account.

Lenders do not favour borrowers with zero credit history. Having no previous history of credit means they have no assurance that you are a responsible borrower, and this puts you in the high risk category when you apply for a loan. What lenders want to see is a proven track record of responsible borrowing and repayment behaviour.

This means you need to have credit accounts and keep them in good standing. You can start small by opening a mobile phone plan or an internet account in your name. Gas and other utility accounts also factor in, as do store credit cards. Make sure they are all registered to your name and address, and make sure you manage these accounts well.

3. Pay your bills on time.

While this point is obvious, it bears repeating. Paying your bills on time is exactly what lenders want to see on your credit report. An overdue payment above $150 makes an appearance on your credit report after 60 days and stays on it for five years! To avoid this black mark on your credit history, pay attention to those bills and pay them within the 60 day-period.

You can keep track of your bills and set up monthly calendar reminders to help you make punctual payments. Also consider scheduling a regular direct debit or automatic payment to help you stay on top of these things.

4. Avoid negative listings at all costs.

This means you avoid payment defaults like the plague because those things really bring down your credit score and stay on your credit report for five years. Not to mention writs, judgments, bankruptcies, and clearouts which are listed for up to seven years. Even if you’ve been wrongly billed and refuse to pay for something you didn’t use or buy, you can protect your credit report by disputing the amount after first paying off the bill.

Defaults are difficult, if not impossible to erase from your credit file, so nip them in the bud before they are listed. If you really can’t make a repayment, consider appealing to your lender for a hardship extension. You can usually negotiate an alternative and more lenient repayment plan if you explain your situation at an early stage. Running away is not a good option because the problem won’t disappear, and your credit default can become a clear out or “serious credit infringement” which has even worse consequences.

5. Avoid too many hard credit enquiries.

Each time you apply for any form of credit, your prospective credit provider is likely to make an enquiry on your credit report. This is called a “hard” enquiry, as opposed to a “soft” enquiry where you request your own credit report. Hard enquiries take a few points off your credit rating, and lenders tend to view them negatively because having too many hard enquiries on your report suggests you’re desperate for credit and not managing your resources well.

That’s why you should only apply for credit when you’re confident of being approved. It’s also wise to be conservative with credit, because there’s no sense wrecking your credit history trying to acquire a stack of credit cards. If you’ve been turned down for an application, wait a while before trying again. Time is an important factor in credit reporting, because lenders are more inclined to disregard events in the distant past. This means that even though enquiries stay on your report for five years, listings from more than two years ago are considered much less relevant than more recent ones.

Learn how your credit report can affect your credit card

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42 Responses

  1. Default Gravatar
    JohnOctober 13, 2017

    How do I order my credit file to check it?

    • Staff
      JudithOctober 14, 2017Staff

      Hi John,

      Thanks for contacting finder, a comparison website and a general information service.

      You may obtain a copy of your credit file once a year from any of the main credit reporting agencies. If you reside anywhere in Australia you can order your file from Equifax or Dun & Bradstreet, and if you reside in Tasmania you also have the option of ordering it from the Tasmanian Collection Service.

      I hope this helps.

      Best regards,

  2. Default Gravatar
    GrahamApril 6, 2017

    Is there the concept of “credit card utilization ratio” in Australia like in the USA? In USA if you spend more than 30% of the credit limit it’s considered a negative thing for building up your credit.
    Does Australia banks care about that?

    • Staff
      MayApril 6, 2017Staff

      Hi Graham,

      Thank you for your inquiry.

      The “credit card utilization ratio” scheme/concept on credit cards is not available in Australia. You’re allowed by the bank to spend up to your credit limit and this does not affect your credit score. In Australia, factors like payment defaults, credit enquiries, several credit applications, among others, can result in a negative/bad rating.


  3. Default Gravatar
    September 20, 2016

    A few months ago I applied (and was accepted for) an American Express card. This has caused my Credit Score with Experian to drop from 747/1000 to 603/1000 and my Veda Score to drop from 850/1200 to 683/1200.

    I have 0 defaults, judgement, bankruptcies etc and have never missed a payment on anything in my life. My overall credit utilization is probably around 15-20% at most and monthly I either pay my cards off in full, or a large portion of the balance (at least 50%).

    Both Veda and Experian show 6 enquiries between Jan 2012 and Apr 2016 (The latter being my AMEX application). Prior to the AMEX my last enquiry was over 2 years prior in March 2014. This seems to be huge hit on my credit score upon applying for the AMEX card – is that normal?

    My score seems very low for someone who has a completely unblemished credit record. I have a relatively high income (well into 6 figures) and could happily service any debt even if I maxed out the 3 credit cards I hold – which I have never gotten close to doing. One of those cards has a relatively high limit which is useful as I travel, and I have clearly demonstrated my ability to service it (and the bank always offering me more).

    I like to have at least 2 cards (with different banks) when travelling in case of issues, and I applied for the Amex primarily to take advantage of a Qantas points deal which I have done. If I cancel the Amex card – is my credit score likely to improve? I have no real need for it now I have got the points, but it may be handy to keep if cancelling it won’t improve my score as it has good Qantas points earn for certain things.

    I’m really not sure what else I can do to improve my score – it seems to be quite bad considering I have an unblemished credit history. I may want to get a mortgage in the next year or two and I want my score to be a good as possible to allow me to negotiate the best rate.

    • Staff
      YsaSeptember 21, 2016Staff

      Hi Adam,

      Thanks for reaching out and I’m sorry to hear about the situation you’re going through.
      Just to confirm though, you have come through, an Australian financial comparison website and general information service. As we are not credit experts, we can only provide you a general advice regarding the products we display.

      However, there could have been a number of factors why a credit rating is lowered. Some reported reasons include multiple credit card applications, balance transfers, payment defaults and credit enquiries.

      For further tips and information, you may wish to check our credit repair guide and some credit alternatives if you have a bad credit rating.

      If you are also considering to get a mortgage in the future, it would be best to speak to a mortgage expert about refinancing options to assist you with the process. This article might also help you gain an insight on how to increase your chances of approval even with a bad credit.

      I hope this helps. Please let me know if I can assist you further.


  4. Default Gravatar
    AhmedJuly 27, 2016

    I have a credit score of 420, the only thing on my credit report was applying for post-paid contract with Optus for 2 years in last November and credit card in last December then I canceled my contract with Optus after two months and I pay all my bills and credit cards arrears on time. However, my credit card goes from 360 to 420 only within 6 months.

    my report doesn’t show that I canceled my contract with optus.
    also, I got an offer to increase my credit card limit, is this affecting my credit score?


    • Staff
      MayJuly 28, 2016Staff

      Hi Ahmed,

      Thank you for your question.

      Yes, your credit card limits have an effect on your score, so if you can afford to reduce limits you may want to consider doing it. If you also want to improve your credit score, you may want to check this article and find more information from our guide.


  5. Default Gravatar
    IsobellaMay 1, 2016

    I have a credit score of about 560. The only thing on my credit report was a $12000 loan I applied for and got rejected.
    How do I remove this from my file and improve my score?


    • Staff
      MayMay 3, 2016Staff

      Hi Isobella,

      Thanks for reaching out.

      Usually, credit applications, enquiries and overdue accounts are held on your file for 5 years. The only way to get any listings removed in your file is if they were recorded in error or incorrectly. You can contact the lender directly or you may want to work through a credit service to make sure that the listing is lifted.

      Please feel free to visit this page to find invaluable information about your credit file. There are also tips on how you can improve your credit score here.

      I hope this has helped.


  6. Default Gravatar
    JustinApril 13, 2016

    I have a current credit rating score of 512 which I believe is a tad below average.
    This is due to defaulting on a personal loan. I paid out the loan and it has last month removed from my credit file.
    The only default I have left on my file is an Optus bill I defaulted on due to changing address and not receiving a statement. It is now fully paid and settled. It will be 4 years until this removes from my file.

    My question is around what type of credit score do I need to have before I apply for a line of credit to strengthen my credit rating? I am looking at purchasing a house in the next couple of years and I am sick of the bank saying I am eligible for credit due to my salary and then declining me due to credit score which effects my score.

    Can you please give me some idea?

    • Staff
      MayApril 13, 2016Staff

      Hi Justin,

      Thanks for your inquiry.

      Indeed, your credit score will determine how attractive you appear to credit providers, especially if your credit file has already a mark of default. Therefore, it is important to improve your score before applying for credit. This score ranges from 0-1200, with higher ratings indicating better creditworthiness which is displayed as a percentage and a number. For a “good” credit score you must get 41%-60%.

      You can actually find invaluable information on credit scoring on this page.

      Hope this helps.


  7. Default Gravatar
    BillNovember 19, 2015

    Due to poor life choices I have a berry poor rating of 251 I have made no defaults in the last 7 years I have had one telco contract witch is direct debited and has been paid on time for over 3 years now when can I expect my credit score to improve on my credit report card on credit savvy I have one special credit relationship listed and only two credit enquires is there a way to improve my score

    • Staff
      JonathanNovember 22, 2015Staff

      Hi Bill, thanks for your inquiry!

      A good place to start with assessing your credit score is requesting a copy of your credit file. Paying your bills on time is one of the ways you can improve your score, please see our page on improving your credit score for more methods and positive actions you can take.



  8. Default Gravatar
    LachlanSeptember 17, 2015

    Hi there,

    My current credit rating is 565 which is average, I just got declined when I tried to apply for Amex Discovery CC. I’m just wondering how to improve my rating?

    Back in 2012 I forgot to pay a plan so it’s like long overdue, but when I got the letter I paid it off straight away.

    Also I paid few bills a week late these past few months due to I forgot to move money from my savings account to the transaction account.

    What should I do to fix my rating?

    • Staff
      SallySeptember 18, 2015Staff

      Hi Lachlan,

      Thanks for your inquiry.

      Making repayments on time and avoid making new credit card inquiries are just some of the ways you can repair your credit rating.

      As a starting point, it may be best to request a copy of your credit file to check for any incorrect marks or improper listings on your file.

      You may wish to check this page for references on how to fix your bad credit record and repair your credit rating.

      I hope this has helped.



  9. Default Gravatar
    RickAugust 4, 2015


    I am wondering whether I have created a difficult situation in regard to Credit Card Applications and Veda credit scores.

    My current Veda Score is sitting at 689 ( Good ). This was after an inquiry from St George in regard to a balance transfer card.

    In March I applied for 2 cards Amex Platinum ( limit 7.2k and Bankwest limit 4k. Bankwest also put an extra inquiry on my Veda account in error.
    My Veda score went from 769- 729.

    In late April I was approved by my primary Bank for a 6k Card ANZ Low Rate.
    After applying for the ANZ Card my Veda rating remained at 729.
    Since applying for the balance transfer card it has dipped to 689 (good).

    I intend to possibly close the AMEX card and the Bankwest cards or keep them open with a zero balance.

    I am intending on applying for a Mortgage and possible Vehicle Loan after June 2016 and am concerned that my Veda score may not recover.

    Should I keep the Balance Transfer card at 11k and the ANZ at 6k ?

    Finding information on loan/value ? balances and how time effects Veda scores is really hard to find.

    My Annual income is 65k Gross.

    Thanks Rick

    • Staff
      SallyAugust 12, 2015Staff

      Hi Rick,

      Thanks for your inquiry.

      As you already know, having a good or excellent vera score highly depends on how well you manage your credit.
      To serve as your guide, you may check out our “How to Understand Your Vera Score” page here .

      It’s entirely up to you to decide on which balance transfer to keep, but if your concern is getting a loan application approved, then you have to ensure that you maintain a good credit file. That said, you might also find some of our tips useful.

      I hope this has been helpful.



  10. Default Gravatar
    DeanJanuary 14, 2015


    My last VedaScore was 789 which I’m happy with and have no outstanding debt. I recently applied for a credit card with a $10k limit really just to have on hand in case of an emergency. I’m finding I’m not actually using this card. Would it be more beneficial to my credit rating to use the card and pay off the balance monthly or just keep it open with a nil balance?


    • Staff
      ElizabethJanuary 16, 2015Staff

      Hi Dean,

      Thanks for your question.

      There really shouldn’t be too much of a difference on your credit file as long as you maintain minimum repayments on your credit card. On your credit file the current limit of your credit card is listed as well as if you’re making repayments on time, but not how much of your credit you’ve used. You can read more about your credit file on this page.

      I hope this has helped.



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