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Improve Your Credit Score

Find out what makes up your credit score so you can work to improve it.

A credit score is a rating based on the information on your credit file. Throughout your life you make various applications for credit, whether it be for loans, credit cards, utilities or even phone bills, and your ability to manage those accounts is recorded on your credit file. This helps other lenders make informed decisions about whether to lend to you. Your credit score is another factor that helps lenders and credit providers make those decisions.

Get your free credit score today

This guide will show you what information goes into your credit score and how you might be able to improve it.

What is a credit score?

A credit score is a numerical representation of your credit history. Each credit bureau determines your credit score differently. For example, credit reporting bureau Equifax will give you a number between zero and 1200 for your Equifax Score.

Lenders and credit providers use the information in your credit file as well as your credit score to make decisions about whether or not you are a reliable borrower. Finding out your credit score can tell you where you sit in the credit-active population, whether or not you have "good" credit or just "average" credit, and if you might be able to improve your credit position.

How does a credit score work?

Your current credit score is a useful number to know before applying for credit. If you have a credit score in the higher percentiles, you are likely to be approved for credit (if you can afford the loan you are applying for). If you have a low credit score a lender may look harder at your application for credit to ensure you can afford the loan. To demonstrate how a credit score works, we will look at the Equifax Score:

Credit positionEquifax ScorePercentileWhat it means
Excellent833-120081-100%An adverse event is highly unlikely to harm your credit in the next 12 months.
Very good726-83261-80%You're two times as likely as credit-active population of Equifax in Australia to keep a clean credit report and it's unlikely you'll incur an adverse event in the next 12 months.
Good622-72541-60% You're less likely to incur an adverse event on your credit file, such as declaring bankruptcy, missing a payment on a debt or having a court writ or judgment listed, indicating less likelihood of a default.
Average510-62121-40%You're likely to incur an adverse event such as a default, bankruptcy or something similar in the next year.
Below average0-5090-20%This score range indicates a very high likelihood of adverse events being listed on your credit file within the coming year. Events can include court judgments, bankruptcies, insolvency or defaults.

How is my score calculated?

Your credit score is determined by the information that's included in your credit report.

  • Your personal information. Your age, how long you've been employed and the time you've been at your current address is used to calculate your risk.
  • Age of your credit report. The length of time your credit report has been active has a direct effect on your credit score.
  • Type of credit providers. The type of credit providers you've applied for and held accounts with will also impact your score. For instance, if you've held an account with a bank it will carry a different level of risk than a store finance provider.
  • What credit you've held and the credit limit. Your score will largely be determined by the risk associated with the type of credit requested in your loan application. The credit limit or loan amount you request will also determine your credit risk index and affect your final score.
  • The number of credit enquiries listed on your file. Any time you make an application for a loan, credit card or utility account, it will be added to your credit file. Frequent applications for credit raise your risk index and lower your credit score.
  • The pattern of your credit enquiries and shopping over time. Many credit enquiries within a short period of time may be a red flag to lenders. Defaults and other serious infringements in your credit history also affect your score negatively.
  • Default information. If you have overdue debts, serious credit infringements or clearouts it will negatively impact your credit score.
  • Court writs and judgements. Any listing indicating a court writ or default judgement will decrease your credit score as it's an indicator of increased risk.

What you need to do to improve your credit score

Improving your credit score starts with understanding where you're at with your finances and your credit, and then working to improve them. As your finances improve your credit score will improve with it. Here is a quick guide to improving your credit and financial position:

  • Order your credit score and credit file. These two usually come together, or you can order them separately. You can receive your credit file for free once a year and you can receive your free credit score from finder.com.au. When you know your score, check what credit position you fall into – excellent, average, below average, etc. – and you will have a good idea of how you fare to the rest of the population. Your credit file can then give you a more in-depth understanding of your financial position so you can make actionable changes.
  • Check your file for high-risk listings. Listings can include multiple credit file in a short space of time, high credit limit credit cards, multiple loan accounts and of course, bad credit listings such as defaults, serious credit infringements and bankruptcies.
  • Identify listings that you can improve. No two credit files are the same and so the same improvement process will not be the same for everyone. However, there are a few ways you can improve your credit score. For instance, if you have a high credit limit credit card that you aren't using, you can consider lowering it. If you have multiple personal loans and credit card debt, you can consider consolidating it. If you are unsure how you can improve your position, there are professionals, such as The Credit File Experts, that can assist. Just follow the link at the top of this page.
  • Keep an eye on your score and your credit. The most important step to improving your credit score is keeping an eye on it. Make sure you are in a good credit position before you next make an application to ensure you're approved.
Quick tips to improve your credit score
  • Redirect your bills when moving. To prevent your bills from being listed as defaults when you change your address, ensure that you provide your new address to banks, utility companies, phone companies and other lenders so that your bills are redirected to the new address.
  • Pay your bills on time. Missed or late payments on some credit contracts (for example, home loans, personal loans and credit cards) can affect your credit score negatively, so ensure that you make the minimum payments on all your accounts on time.
  • Consolidate your debt. Consolidating several loans into one can make it easier to manage repayments. It also helps you to save on fees.
  • Check your credit report regularly. This will help you monitor your credit applications so that you flag any applications or enquiries made as a result of identity theft.
  • Do your credit homework. To avoid getting into unnecessary debt, only apply for credit when you need it, and remember to arrange for a repayment plan that suits you to avoid missing repayments. It also helps your credit score if you space out your credit inquiries.

Why is it important to check my credit file?

Checking your credit file regularly helps ensure that everything is in order in your credit report and that your credit score remains healthy. You should order and review your credit report to:

  • Check that all your personal details are entered correctly in your file
  • Ensure that all loans and debts listed are actually yours and that you have not been a victim of identity theft
  • Check for incorrect defaults or debts listed twice and request corrections or for notes to be added to the report.

How can I deal with incorrect listings on my credit file?

You have the right to update your credit report in order to remove outdated or incorrect listings.

If you discover errors about your personal details, including if adverse listings have been entered twice, you should contact the credit reporting agency from which you ordered the report and request them to make amendments.

Other errors, such as wrongly listed defaults, can be dealt with by contacting a credit repair company who can act on your behalf to investigate and help remove adverse information from your report. There are also free ombudsman services for additional help.

My Credit Alert

Order a copy of your credit file

Receive email alerts whenever specific changes occur on your credit file for 12 months. You also receive a copy of your credit file despatched within one working day.

Receive your credit file with information on:

  • Details of consumer credit enquiries
  • Details of overdue consumer credit accounts
  • Commercial credit enquiries
  • Details of overdue commercial credit accounts
  • Bankruptcy & Court Judgements
  • Writs & Summons
  • Information on your current relationship with a credit provider
  • $79.95 p.a. annual fee

Frequently asked questions

How does my credit score impact my credit application?

Lenders depend on credit scores from top credit bureaus, along with your credit report, to determine whether you are likely to default on a loan or credit card. A bad credit rating indicates the possibility of an adverse event occurring in your credit file in the coming months, therefore making lenders reject you for credit or charge you extra for the credit to cover their risk.

Can creditors make erroneous listings on your credit report?

Yes, creditors tend to sometimes list a default onto your file when in fact the debt is in dispute, or list defaults without giving you the required notice that your account is due. This is why you should monitor your credit file yearly and dispute any wrong listings with the help of a credit repair agency.

Picture: Shutterstock

Shirley Liu

Shirley is finder.com.au's publisher for banking and investments. She has completed a Masters in Commerce (Finance) and is the author of hundreds of articles. She is passionate about helping Aussies make an informed decision, save money and find the best deal for their needs.

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21 Responses to Improve Your Credit Score

  1. Default Gravatar
    Sarah | May 16, 2017

    How can I fix all my loans if I have a bad credit score?

    • Staff
      arnold.salas@findercrew.com | May 17, 2017

      Hi Sarah,

      Thanks for your inquiry.

      Your best option would be Personal Loans – This page outlines the lenders that offer loans to bad credit. If you want to discuss your options for a loan and eligibility, best to get in touch with them directly.

      Hope this information helped.

      Cheers,
      Arnold

    • Staff
      Harold | May 17, 2017

      Hi Sarah,

      Here’s an additional guide on how you can fix your bad credit score.

      I hope this information has helped.

      Cheers,
      Harold

  2. Default Gravatar
    Tess | April 30, 2017

    Hello,

    I would like to consolidate my debt via top-up on my Home Loan using equity I have in my home. However I have a very bad credit score and feel this will mean my application for top-up will be declined. I have not applied as yet.

    My bank has a minimum top-up amount of 20K, my consolidated debt is 13.5K and would like to use the remainder for much needed property repair/renovation.

    I would like some advice about whether I should expect my current credit score is likely to mean my home loan top-up to be declined. This would be quite circular as one of the means to attack my debt is to consolidate it.

    Thank-you in advance.

    • Staff
      Anndy | April 30, 2017

      Hi Theresa,

      Thanks for your question.

      Unfortunately, we can’t assess whether your planned home loan top-up will be declined or approved. It really depends on your current provider/bank and the eligibility criteria they have set for topping up loans. It would be best to directly get in touch with your bank and inquire if you are eligible to apply for a home loan top-up, given your credit score.

      Alternatively, you may also consider getting a home consolidation loan with any of the providers listed here.
      If you need expert advice on which option is the best for your situation, you may get in touch with a mortgage broker in your area.

      Cheers,
      Anndy

  3. Default Gravatar
    Naomi | April 20, 2017

    I am on a Working Holiday visa but am planning on making Australia my home – how do I access my credit report with no permanent address?

    • Staff
      Harold | April 21, 2017

      Hi Naomi,

      Thank you for your inquiry.

      Normally, you can get a free access with your credit report.

      Credit file agencies are required to provide you with a copy of your credit file within 10 days of you requesting it. They are also required to ensure that the credit information they hold on you is accurate, updated and relevant, so you can send them revision requests if you discover any errors in your credit history. You’re eligible to receive your credit file within 10 days if you meet the following criteria:
      - You have had an application for credit, such as a loan or credit card, rejected in the previous 90 days
      - You have lodged a request for information to be corrected and you have been advised that the information has been corrected
      - You have not accessed your file in the previous 12 months (you can view your file for free once every 12 months)

      In addition, these are the information you need to provide upon requesting your credit file
      - Your full name
      - Your date of birth
      - Your driver’s licence number
      - Two forms of identification i.e. a copy of your birth certificate, passport or drivers licence
      - Your current residential address
      - Name of the organisation that you last applied for credit

      I hope this information has helped.

      Cheers,
      Harold

  4. Default Gravatar
    ezmay | April 4, 2017

    I have a credit enquiry for a car loan. When purchasing the car the enquiry on my veda file is for the full vehicle cost, however I was trading in my old vehicle and therefore my loan amount was a few thousand less than the vehicle price. Am I able to have this adjusted or am I wasting my time worrying about it?

    • Staff
      May | April 4, 2017

      Hi Ezmay,

      Thank you for your inquiry.

      Generally, the amount of loan you’ll be approved for will be determined by the lender based on their assessment of your overall financial circumstance and credit history. They would also look into your capacity of servicing the loan. Once you have established a good payment record and relationship with your lender, that may be the best time to request for an increase in your loan amount, although, it is at your own discretion if you want to check with them at this early.

      Cheers,
      May

  5. Default Gravatar
    Cathy | February 21, 2017

    Hi
    My credit score is really low and I have checked my report and the report has many enquiries made during my divorce 4 years ago. The enquiries still show even though I do not get any loans during this time.
    Is there any way I can have these enquiries removed as they seem to be stopping me applying for credit now that I am earning good money. I have no defaults etc just lots of enquiries, 3 will be 5 years old in October 2017 and 7 more by October 2018.
    Thank you

    • Staff
      Anndy | February 21, 2017

      Hi Cathy,

      Thanks for your question.

      Please note that you can only remove erroneous entries from your credit history. Also, credit enquiries stay in your file for 5 years.

      You may visit this page for more information how to remove incorrect credit enquiries.

      Cheers,
      Anndy

  6. Default Gravatar
    Meredith | February 21, 2017

    I am surprised that my rating is low, as I don’t have any debt and have not for most of my life, can you tell me why it’s low pls

    • Staff
      Anndy | February 21, 2017

      Hi Mary,

      Thanks for your question.

      There are a number of factors that can affect your Veda credit score, aside from loan applications. You may want to check this page for more information on how your score is computed.

      Also, if you want to get the full details of your credit score, you may request a free credit report from Veda through this page.

      Cheers,
      Anndy

  7. Default Gravatar
    Tom | January 6, 2017

    Hi

    This is good information I paid for my Veda credit file access and alert las July and this hash lot me improve my score from 240 to 618 and with one small load Olmsted paid will go up again above 650 but I am not sure about the other agencies I am with Veda but say dun and Bradstreet who mows what they have I have worked very hard to fix my Veda do the share corrections ??
    And we’re hold I start with applying for a credit card then home loan any suggestions ??

    And to all those people that think it is imposable it is not the ombudsman has been great and can help most enteritis can be removed once payed or they have resisted defaults incorrectly most credit providers are scared of the ombudsman once you provide the truth just keep at them

    • Staff
      May | January 16, 2017

      Hi Tom,

      Thanks for your comment.

      Every credit reporting agency/body uses different version when generating your score. So with Veda for instance, they use the new ‘comprehensive’ version of credit reporting, which uses more data sources to calculate your score. In particular, it uses your positive behaviour, such as regular repayments. The older version of scoring is a ‘negative’ version, which doesn’t take into account positive behaviour with calculating your score.

      As for credit card and home loans options, I’m afraid we’re not able to recommend or suggest a specific card or home loan product to you as we are a third party comparison website. The best option ultimately depends on your financial situation. Nonetheless, for credit cards, you may like to compare your options on this page, whilst for home loans, you may check here. Please note that before you submit any final application, you review the eligibility criteria.

      Meantime, for any wrong information/entries on the credit file that need to be removed, usually, a credit repair is needed. This topic is discussed on this page for your guide.

      Cheers,
      May

  8. Default Gravatar
    Kat | December 17, 2016

    Hi there,
    How do I go about finding out what my credit score is? How do I improve it? Is it free and simple to find out my score and fix it or does it take years to do? I’m only on DSP since I suffered a stroke.

    • Staff
      Jason | December 17, 2016

      Hi Kat,

      Thank you for your enquiry.

      Please click this link to know your credit score for free. It’ll just take you few minutes to fill out the form and you’ll then know your credit score. There are several ways to improve your credit score like paying your bills and debts on time and avoiding unnecessary debts. You can get more tips on how to improve your credit score above on this same page or you may check out this link for more tips on how to improve your credit record. Fixing or building up your credit score might take some time but it’ll be beneficial for you once your credit score improves.

      I hope this helps.

      Kind regards,
      Jason

  9. Default Gravatar
    Tofael | November 13, 2016

    How can I get a Visa Debit card?

    • Staff
      Anndy | November 14, 2016

      Hi Tofaelm,

      Thanks for your question.

      You can refer to this page to check and compare Visa Debit cards. Once you have chosen a particular card, you can click on its name to check the requirements to apply. To submit an application, just click the ‘open button.’

      Cheers,
      Anndy

  10. Default Gravatar
    Nat | November 11, 2016

    Does my savings account factor into my credit score?

    • Staff
      Elizabeth | November 11, 2016

      Hi Nat,

      Thanks for your question.

      Your savings account has no effect on your credit score, but a solid savings history may also help you be approved for a loan as you can often list it along with other assets on an application.

      Hope this helps,

      Elizabeth

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