How to Improve Your Credit Score in Australia
The fastest way to improve your credit score is to pay every bill and repayment on time, because your repayment history now makes up a big part of your score. Keep your credit limits low, space out credit applications, and check your report for errors you can get fixed for free. Most changes take a few months to show, and negative information drops off over time.
Here's what affects your score and the steps that make the biggest difference.
What affects your credit score
Your score is worked out by credit reporting bodies such as Equifax and Experian, using the information on your credit report. The main things they look at are:
- Repayment history: whether you've paid loans and credit cards on time over the last two years
- Credit enquiries: how often you've applied for credit
- Defaults: overdue debts of $150 or more that have been listed
- Your credit limits and types of credit
- Court judgments, bankruptcy and debt agreements
Each bureau uses its own scale. Equifax scores range from 0 to 1,200, and Experian from 0 to 1,000. A lender may see a different score from the one in your app.
How long information stays on your credit report
- Repayment history: 2 years
- Financial hardship arrangements: 1 year
- Credit enquiries: 5 years
- Defaults: 5 years, even after they're paid (the listing is updated to show it's paid)
Sources: OAIC, repayment history and defaults and Equifax, what is a credit enquiry.
8 steps to improve your credit score
- Pay everything on time. A payment is reported as missed if it's more than 14 days late. Set up direct debits for at least the minimum repayment.
- Catch up on overdue accounts. If you're behind, call the lender now. A payment plan is far better than a default.
- Space out credit applications. Each application can add an enquiry to your report for five years. Several in a short time can look like you're struggling.
- Lower your credit card limits. Lenders look at your limits, not just your balance. Close cards you don't use.
- Treat buy now, pay later like any other credit. BNPL providers now need a credit licence, and some report to credit bureaus, so missed payments can count against you.
- Check your report for errors. You can get a free copy from each credit reporting body every three months.
- Dispute anything that's wrong. Contact the lender or the credit reporting body. Correcting errors is free.
- Keep your details up to date so overdue notices don't go to an old address.
Be wary of "credit repair" companies that charge large fees. They can't remove correct information, and you can dispute errors yourself for free.
How long does it take to improve your score?
Small improvements can show within a few months of on-time payments. Bigger issues take longer: missed payments fall off after two years, and defaults after five. The sooner you start, the sooner your history starts working for you.
Can you get a loan while you rebuild your score?
Sometimes. Some lenders look beyond your score at your current income, expenses and recent bank statements. Read how Jingle assesses applications in our guide to bad credit loans. Every application is assessed individually, and approval is not guaranteed.
For a full explanation of scores and bands, see our guide to credit scores in Australia.
Frequently asked questions
How can I raise my credit score fast?
Pay everything on time, catch up on any overdue accounts and avoid new credit applications. Most improvements take a few months to show.
Does paying off a default remove it?
No. A paid default stays on your report for five years, but it's updated to show it's been paid, which looks better to lenders.
How often can I check my credit report for free?
You can get a free copy from each credit reporting body every three months.
Does checking my own credit score lower it?
No. Checking your own score or report doesn't affect it.
Can a credit repair company fix my score?
They can't remove correct information. You can dispute errors yourself for free with the lender or the credit reporting body.
Sources
Disclaimer: This information is general in nature and doesn't take your objectives, financial situation or needs into account. Credit provided by Jingle Finance Pty Ltd ACN 132 485 066 trading as Jingle Loans, Australian Credit Licence 388143, to approved applicants only. Terms, conditions, fees, charges and eligibility criteria apply.
