There are a number of things you can do to improve your credit score quickly and over a longer period of time.
You can start by consistently repaying your debts on time, paying off any missed or late payments and being careful about managing and minimising your existing debts.
However, improving your credit score is also a long-term process and it's important that you continue to take steps to ensure your score doesn't decrease over time.
Follow these steps and you'll increase your credit score in no time:
You can't improve your credit score if you don't know what it is and don't understand what it means.
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.
| Response | |
|---|---|
| No | 68.8% |
| Yes | 31.2% |
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.
You should 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.
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. So you might actually be better off applying for a credit card with your bank as a first step.
Just make sure:
Unfortunately your credit report doesn't necessarily record all the years you've spent paying your phone, internet, electricity and gas bills on time. Bills are not credit.
But if you've missed a bill payment by more than 14 days it will negatively affect your score.
So make sure you pay your bills on time. Setting up direct debits for your bills (or even automatic reminders) is the easiest way to do this.
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 $6,000 versus one with a limit of $2,000.
If you don't need to make big purchases on your credit card, lower your limit.
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'll 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.
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.
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.
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:
Here are the 3 key steps you should take today to boost your score:
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.
Missing a phone bill can end up hurting your credit score, but simply having a mobile plan won't impact your credit report.
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I have a credit card for $1k and a personal loan of $53k which I used to start my business. Now my business has generated me a good amount of cash flow, If I pay about $20k back to my loan, would that increase my credit score? Or would I need to fully pay my loan off in order to see a better credit score? And if I only pay $20k, would I be eligible to apply for another business loan? Thanks.
Ps. I love your services.
Hi Luis, A number of things can impact your credit score. We know that credit scores tend to increase when a credit facility is closed altogether; reducing the credit limit can also have a positive effect. Making payments on time also contributes towards positive credit reporting. Overall, it’s hard to say with certainty what impact repaying $20k as lump sum would have.
As for obtaining another loan, your eligibility depends on several factors including your income, expenses, how long the business has been operating etc. There are a few options you could explore, such as consolidating your personal loan and credit card into one new personal loan for a higher amount to access new funding, then closing your existing 2 accounts.
Hope this helps!
I currently have Debt Agreement which will expires in January 2024. Will this fix my credit score?
Paying off an existing debt should have a long-term impact. However, other factors influence your credit score so you might not see an immediate change in your score even once that debt is repaid.
Hey I’m just in need of emergency funds of 250. My credit score is just below average like by the smallest bit.
Does anyone know where I could get a apporval for this amount ASAP. Thanks.
Hi Keiarna,
This guide about PayDay Loans may be helpful.
Also, if you need help to manage your debt, the National Debt Helpline provides a free and confidential service to help you get back on track.
If a have a “very good” score of 760, how do I make it excellent like 850? I have never missed schedule payments or defaulted any payments etc. How to improve Credit Score which increase the chance in excelance report of credit? Please help
Hi there,
Congratulations on your score of 760. There are several things that you can do to improve your credit score.
It sounds like you’re already paying your bills on time. To try and improve your credit score, you can look at decreasing the limits on any credit cards you own. Also, consider increasing the frequency of your payments to pay off any loans or credit cards quicker.
A ‘hard enquiry’ will show up on your report whenever you apply for a new credit product. These only become concerning when there are many hard enquiries over a short period. Try and limit any applications for credit to one every few months.
When you check your credit score and report with Finder, carefully review each entry against your records and ensure your report accurately reflects your history. If you’ve found any incorrect listings in your credit report, contact your creditor or the credit reporting bureau to investigate this.
I hope this helps.
Cheers.
I would like something cleared on my credit report that has been paid out as this is affecting my credit rating