10 ways to get a great credit score: 5 Aussies spill their secrets
Turns out there are a bunch of ways to get a great credit score.
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Good credit is ideal. But how do you get there? Perform a quick search for "How to get a good credit score" and the majority of articles will be filled with phrases such as credit utilisation and FICO. These US terms are of little use to us Australians, and unfortunately, the path to good credit is a little murkier down here.
We wanted to clear that path up a bit, so we hunted down five people with "excellent" and "very good" credit score ratings (the top two tiers in Experian's rating system) to find out what we can learn from their good credit behaviour.
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Who are our good credit scorers?
Who are our good credit scorers?
- Brian & Laura (excellent)
- John, Alexa & Lee (very good)
How did they get such good credit?
There are many ways to get a good credit score but all five of our respondents have the following in common.
- Making payments on time. Making credit card and loan repayments on time is critical to maintain your credit score, not just for avoiding a negative listing, but for building your positive history. Laura said her pro tip for ensuring she never pays late is to set up automated payments.
- Having a long credit history. If you don't have a credit score and are looking to start off on the right foot, it could be a good idea to open an account you know you can maintain. Alexa said her credit history started when she switched from a prepaid to a postpaid phone contract when she was 18.
- Few credit accounts. Having too many open accounts, and therefore a lot of available credit, can damage your score. When John realised that he had a low-rate credit card he wasn't using in favour of his frequent flyer card, he decided to close it.
- Debt consolidation. If you have several credit accounts that you're struggling to pay off, you can consolidate them into one and close the accounts to reduce interest charges and simplify your repayments. When Alexa realised her credit card and personal loan repayments were becoming difficult to balance, she consolidated them onto a Citi credit card.
Have they actively done anything to get such good credit?
Our good credit scorers haven't consciously tried to improve their credit scores specifically, but believe their scores are good for a few reasons and have all done the following.
- Ordered their credit file and educated themselves. You can order your credit report and get your score for free through finder. After John got his credit report, he read up on what it means and what you can do with a good credit score.
- Focused on managing and improving their finances. In general, our good credit scorers take responsible steps to manage their finances. When Lee realised he was paying too high a rate on his personal loan, and refinanced it to cut his rate in half.
- Make sure their bills get paid. In addition to setting up automated payments, our respondents take proactive steps to ensure all their bills get paid. For example, Alexa has lived in a few rental properties and decided to have her bills sent to her parent's house so they don't accidentally go unpaid.
Have these great credit scores actually helped with the following?
Our good credit scorers have taken advantage of some of the perks that come with a good credit score.
- Helped get a low rate on a peer-to-peer loan. A good credit score can help you to get a better rate on a peer-to-peer loan. When Lee refinanced his personal loan from a bank with a peer-to-peer lender, his credit score directly led to him getting half the rate the bank was offering.
- Helped get a home loan. A good credit score can help you to get a home loan and is arguably the primary reason credit scores are important. Brian believes his good credit absolutely helped him to get a loan for his first home.
- Provided future potential to access credit. Whether or not you need credit now, a good credit score will likely be important down the line. For example, Alexa has had a couple of credit cards for travel, but wants to keep her score high for when she needs to take out a home loan.
There are a number of ways people get their credit score in the top tiers. Find out what strategies work for you and see where your credit is now by checking for free with finder.com.au.
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