5 ways you're hurting your credit score

5 ways you’re hurting your credit score

Last updated: 11 December 2019

Your credit score can be viewed as your financial reputation or even a financial CV. So it stands to reason that you want to keep in the best shape possible.

We’ve listed 5 ways you might be hurting your credit score and some of these you might not even know about. They also happen to be some of the most common.


1. Ignoring it

If you don’t know your credit score or what’s on your credit file then you’re certainly not alone. Research by Experian found that 80% of Australians have never accessed their credit report.

But here’s the thing. If you don’t know what you score is, then you don’t know if you can improve it. You can check out your credit score and credit file information with us for free! There might even be things on your file lowering your score that shouldn’t even be there which leads us to…


2. Not correcting errors

Whilst you may be doing everything right, others may have made mistakes and this can happen more than you think.

Examples of errors in your credit file may include something as simple as a misspelling of your name, the wrong address, or even a credit listing that is incorrect or duplicated.

Incorrect information can impact you score so it’s important to contact the provider of the incorrect item and ask them to correct it. Our Learning Hub has more information on what to do if you believe there is a mistake on your file.


3. Too many applications

When you apply for a credit product, a credit enquiry is recorded on your credit file by the credit provider. These are recorded on your file for five years and their effect on your score varies.

Having a large number of credit enquiries on your file over a short period of time can make you appear less favourable to credit providers. On the one hand, they may assume your previous applications have been declined and so you might be a high risk. On the other hand, they may assume your past applications have been approved and you may be less capable of making repayments on any new credit due to all the existing credit.


4. Applying for certain products with certain providers

The other thing to look out for with applications is the ‘what’ and ‘who with’.

Not all applications are equal! For example, payday loans from payday lenders are viewed less favourably than a mortgage application with a major bank. That may be an extreme example but even ‘unsecured’ credit like a credit card can affect a score differently to ‘secured’ credit like a car loan.

So before applying, consider what type of credit you are applying for, who the credit provider is and the impact this could have on your credit score!


5. Not paying on time

Up until recently whether you made your credit repayments by the due date was not recorded on your credit file unless you were really late and ended up defaulting. But things have changed with Comprehensive Credit Reporting (CCR) coming into effect.

This means providers can report whether you have made at least the minimum payment required and whether it was on time. So whilst we are in a transition period and not all providers are providing that information yet it may be time to set up those direct debits!