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Improve your credit score

Here are 9 things you can start doing today that will improve your credit score and fix your credit rating.

How to improve your credit score

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.

1. Check your credit score

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.

Credit score scale blue light

Along with the score you'll get your credit report, which contains:

  • A 24-month history of your loan repayments, including late payments or defaults.
  • Information about your credit accounts (loans and credit cards).
  • Any enquiries or requests made by lenders for your credit report in the last 5 years.
  • Any bankruptcies or court judgements in your name.

Once you have your credit score you can identify the best ways to increase it.

Finder survey: Have many Australians have taken steps to improve their credit score?

Response
No68.8%
Yes31.2%
Source: Finder survey by Pure Profile of 1016 Australians, December 2023

2. Correct any errors in your credit report

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:

  • Incorrect personal information
  • Incorrect missed payments or defaults
  • An unpaid debt you were never notified about
  • Enquiries made on your behalf for credit you never applied for

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.

3. Pay off late payments and defaults

You should fix the biggest issues dragging your credit score down as soon as possible. Red marks on your credit report are usually:

  • Missed payments. If you've missed a payment on a bill by more than 14 days it is recorded on your credit report for 2 years.
  • Defaults. If a repayment is more than 60 days overdue and the amount is $150 or more, a default is recorded in your credit report. Defaults stay on your report for 5 years.

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.

4. Make regular repayments on your debts

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.

Good credit means going into debt

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:

  • You keep the credit limit low
  • You actually use the card to buy things
  • You make regular repayments on time
  • The card has low fees

5. Pay your bills on time

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.

6. Lower the limit on your credit card

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.

7. Avoid multiple debts, especially high interest ones

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.

8. Avoid applying for too many credit products at once

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:

  • Don't apply for multiple debts at once
  • Apply for a single credit product from a single provider
  • Make sure your application is completed correctly and that you're eligible for the product before you apply

🔥 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.

9. Watch out for buy now pay later

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.

More useful tips to get a better credit score

Time heals all credit wounds

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.

Credit repair companies

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.

Keep a good credit card

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.

Get help

If you're struggling to make repayments and need financial help you have options:

  • Talk to your utility and credit providers. Before you miss a payment talk to your providers. They have hardship support schemes and payment plans available for customers.
  • Get free financial counselling. The National Debt Helpline has free financial counsellors you can speak to on 1800 007 007.

What's the best way to improve a bad credit score?

Here are the 3 key steps you should take today to boost your score:

  1. Pay off any outstanding debts or overdue bills.
  2. Make sure your credit report is accurate
  3. Consolidate your debts and loan accounts

How do I improve my credit score fast?

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.


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Editor

Richard Whitten is a money editor at Finder, and has been covering home loans, property and personal finance for 6+ years. He has written for Yahoo Finance, Money Magazine and Homely; and has appeared on various radio shows nationwide. He holds a Certificate IV in mortgage broking and finance (RG 206), a Tier 1 Generic Knowledge certification and a Tier 2 General Advice Deposit Products (RG 146) certification. See full bio

Richard's expertise
Richard has written 526 Finder guides across topics including:
  • Home loans
  • Property
  • Personal finance
  • Money-saving tips

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161 Responses

    Default Gravatar
    LianaJune 6, 2024

    Can I get more information around my credit score there is only 2 missed payments surely that can’t be the reason for a low score??

      AvatarFinder
      SarahJune 11, 2024Finder

      Hi Liana, If you contact the provider of your credit score (eg Experian) you can request a copy of your credit file. This lists the full details of your financial history for the last few years, so you can look for any discrepancies. You can access all of this information in the Finder app; you’ll also get sent a monthly update with any changes to your score.

      Best of luck!

    Default Gravatar
    LuisNovember 21, 2023

    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.

      AvatarFinder
      SarahDecember 14, 2023Finder

      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!

    Default Gravatar
    SusantiOctober 17, 2023

    I currently have Debt Agreement which will expires in January 2024. Will this fix my credit score?

      AvatarFinder
      AngusOctober 18, 2023Finder

      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.

    Default Gravatar
    KeiarnaSeptember 29, 2023

    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.

    Default Gravatar
    CreditNovember 9, 2021

    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

      AvatarFinder
      ChrisNovember 17, 2021Finder

      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.

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