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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.

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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.

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.

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56 Responses

  1. Default Gravatar
    CeliaApril 20, 2018

    I applied to a bunch of places for credit card or small loan and thought my score wouldn’t be affected! What can I do about that? It was good according to a report I had awhile ago, I need financial help to go forward and get ahead.

    • Staff
      JhezelynApril 20, 2018Staff

      Hello Celia,

      Thank you for your comment.

      Firstly, you may need to obtain a credit reportt, this document explains why you got a certain score. Please note that it may take up to 10 days for you to receive your credit report after requesting it.

      Regarding your quest to look for financial help, you have the option to contact the financial counselling hotline which is a free service. See this page for emergency financial assistance options from the Department of Human Services. I hope this helps.

      Regards,
      Jhezelyn

  2. Default Gravatar
    JohnApril 18, 2018

    I have a couple of issues where I disagreed with money owed for alleged services, and I refused to pay them, and I had, in the case of a health club fees, a Doctors certificate which was ignored. Another, I paid about $700 , for building leads that amounted to nothing, so I cancelled my direct debit to them, but they insisted I owed them money.
    How is it these companies can discredit me weather they are right or wrong ?
    Do I need legal action ( more cost, for no reason ) ?
    Cheers John

    • Staff
      NikkiApril 18, 2018Staff

      Hi John!

      Thanks for your message and for visiting finder – the leading comparison website & general information service built to give you advice in your buying decision needs. How are you doing today?

      Sorry to hear that you ran into a few hiccups.

      Please note that we’re a product comparison website and we hold no affiliation with any company/legalities we feature on our site. We provide general information on products to assist you in your buying decision process hence we cannot recommend product / service that is rightfully fit for you.

      You may want to review this page on how to understand how a credit score works.

      Hope this helps! Feel free to message us anytime should you have further questions.

      Cheers,
      Nikki

  3. Default Gravatar
    SharelleApril 16, 2018

    How do I improve my credit rating

    • Staff
      NikkiApril 16, 2018Staff

      Hi Sharelle!

      Thanks for your message and for visiting finder – the leading comparison website & general information service built to give you advice in your buying decision needs. How are you doing today?

      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.

      Hope this helps! Feel free to message us anytime should you have further questions.

      Cheers,
      Nikki

  4. Default Gravatar
    TimothyApril 11, 2018

    Hey, I need help improving my credit score. I’m below average, and im embarrassed to find help

    • Staff
      NikkiApril 11, 2018Staff

      Hi Timothy,

      Thanks for your message and for visiting finder – the leading comparison website & general information service built to give you advice in your buying decision needs. How are you doing today?

      We’re sorry to hear that you’ve received a low credit score. No need to be embarrassed as this is normal. There are steps on how to improve your credit score here.

      The first thing you have to do is to order your credit score and credit file and check the following.

      Personal information. Ensure all of your personal details are correct. This is to limit the chance of identity theft or being rejected for credit because of a misspelt first name.
      Incorrect defaults. Credit reporting agencies or lenders might list a default incorrectly into your file. A default could be listed twice or you could have a default listed for an account you paid on time. If you find an incorrect default talk to the credit reporting bureau first, then if that doesn’t rectify it you should contact the credit provider. A full process for dealing with incorrect listings is outlined below.

      Keep an eye on your credit score from time to time. Make sure you are in a good credit position before you next make an application to ensure you’re approved.

      Hope this helps! Feel free to message us anytime should you have further questions.

      Cheers,
      Nikki

  5. Default Gravatar
    DuncanApril 10, 2018

    I have recently finished paying off a few debts and now am debt free. There should not have been a default on my credit as this was a part of the payment agreement. How can I fix this and have my credit reinstated?

    • Staff
      NikkiApril 10, 2018Staff

      Hi Duncan,

      Thanks for your message and for visiting finder – the leading comparison website & general information service built to give you advice in your buying decision needs. How are you doing today?

      Sorry to hear that there is a default on your credit.

      Once a default is listed the amount can’t be changed to reflect recent payments or missed payments. If you miss a payment it will be listed as a separate default. However, the listing can be updated to show accruing interest and fees. If you pay the full defaulted amount the credit provider needs to inform the credit reporting body who will update the listing to “paid”. A default is just one kind of bad credit listing. Defaults will generally remain on your file for five years and place you in the bad credit basket for lenders.

      To assist you on how to repair your credit, this page will guide you in every step.

      Hope this helps! Feel free to message us anytime should you have further questions.

      Cheers,
      Nikki

  6. Default Gravatar
    LauraApril 7, 2018

    I have a six year old Telstra default which I have disputed Telstra has never supplied me with the actual bill but still placed the default on my credit the amount is 950.00 and this is preventing me from obtaining credit seven years will be up in Aug 2019.

    • Staff
      JhezelynApril 7, 2018Staff

      Hello Laura,

      Thank you for your comment.

      You can request for a copy of your credit report, this way you’ll see the record of your loan applications and repayment history. Kindly refer to this page for a guide on how to remove defaults in your file. I hope this helps.

      Regards,
      Jhezelyn

  7. Default Gravatar
    paulApril 6, 2018

    Hello,
    I purchased a home 7 months ago, I have a mortgage yet this is not listed on my credit file , why is this so ?

    • Staff
      ArnoldApril 6, 2018Staff

      Hi Paul,

      Thanks for your inquiry

      There are several reasons why your mortgage may not appear on your credit report, including:

      1. Lender not reporting: Some mortgage lenders – especially smaller firms – do not always report mortgages to the credit bureaus, unless there is a problem. This means, your good payment history will not show up, but any late or missed or late payments could appear.
      2. Clerical errors: Mistakes happen. A human or computer error could cause your mortgage from not appearing. All it takes is an error on one digit of your Social Security number or any other small mistake that can keep your mortgage from the report.
      3. Non-traditional financing: If you borrow directly from and are paying your home’s previous owner (rent-to-own agreement) or if you use some other form of non-traditional lending, your mortgage most likely will not appear on your credit report.
      4. Bankruptcy: Filing for Chapter 7 bankruptcy wipes out all debt allowed by federal law. If a reaffirmation agreement is not signed, your mortgage may not appear on your credit report.
      5. Delay in reporting: It typically takes 30 to 60 days after you sign your mortgage paperwork for it to appear on our credit report. Processing delays during busy seasons could delay this even longer.
      6. Name not on mortgage: If you and your spouse bought a home, but only your spouse’s name appears on the mortgage for financing reasons, the mortgage will not appear on your credit report.

      If your mortgage is not appearing on your credit report, you might be able to get it added. You cannot submit your mortgage yourself, but you can check for clerical errors and ask your lender to correct them.

      If your lender does not report your mortgage to any of the credit bureaus, you cannot force them to do so. However, if you are trying to get a new mortgage, you can present your prospective lender with evidence of the loan and your payment history.

      Hope this information helps

      Cheers,
      Arnold

  8. Default Gravatar
    March 22, 2018

    Hello,

    I have a credit score of average (591 out of 1200) and I have now obtained my credit report. I do not have any defaults or bankruptcy’s in my credit file, only enquirys so would like to know why my credit score is so bad?

    Thank you

    • Staff
      JeniMarch 22, 2018Staff

      Hi Lucy,

      Thank you for getting in touch with finder. Credit enquiries, or loan applications, are not necessarily bad, but having numerous enquiries listed in a short period of time can be. Generally, applying for credit once every three months will not contribute to a lower score. If you spot an error, get in touch with the lender in question and ask it them to rectify the mistake. If you’re not happy with the way the lender handles this, you can always get in touch with the relevant Ombudsman service.

      I hope this helps.

      Have a great day!

      Cheers,
      Jeni

  9. Default Gravatar
    RebeccaMarch 22, 2018

    I would like to know why I have such a terrible credit score and how I repair it

    • Staff
      JeniMarch 22, 2018Staff

      Hi Rebecca,

      Thank you for getting in touch with finder. Missed repayments, loan defaults, debt agreements and bankruptcy details are collected by credit-reporting agencies and can all feature in your credit file. The agencies then use this information to calculate your risk as a borrower, with this risk reflected as a credit score. To check why you have a bad credit score you can order a copy of your credit file from one of Australia’s three main credit reporting agencies: Equifax, Dun & Bradstreet or Experian. To repair your credit score there are some steps that you can do like getting a copy of your credit file and monitor your credit score from time to time, fixing any incorrect listings, taking control of your debt, staying on top of repayments, avoiding making multiple credit applications and contacting the National Debt Helpline on 1800 007 007 to find free financial counselling in your area. Financial counsellors offer independent expert advice on how you can manage your money and eliminate debt.

      I hope this helps.

      Have a great day!

      Cheers,
      Jeni

  10. Default Gravatar
    JoelyMarch 17, 2018

    How do I get a list of defaults etc so I can improve my credit rating?

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