How to improve your credit score
There are many ways to go about improving your credit score but fundamentally it does take time and requires you to maintain a healthy credit history. There is no ‘quick fix’ or shortcut when it comes to improving your credit score. A good credit score can help you secure favourable borrowing rates to help you with life’s big purchases so it’s worth the effort.
Did you know Credit Savvy members can view their Credit Report Summary and easily review the key categories that impact credit scores?
The more recent an entry on your credit file, the greater impact it is likely to have on your score. Each type of information has a set time period that it can hold on file (Credit enquiries for example, are held on file for a maximum of 5 years). So time can be an important factor in credit scores, especially when it comes to negative events such as defaults.
While we can’t speed up time, or turn back the clock, there are actions you can take that may improve your credit score.
- Make all your repayments on time. This demonstrates good financial responsibility and with the recent changes in Comprehensive Credit Reporting (CCR), the minimum payment amount and payment date on which you pay may be listed on your credit file and impact your credit score.
- Borrow only what you can afford to pay back. Make an honest assessment of your finances and be sure to consider all of your financial obligations, including any Buy Now, Pay Later accounts you may have.
- Limit the number of credit enquiries/applications you make. Multiple credit enquiries in a short time frame can lower your score. Research the credit products available in the market first, read the appropriate product information and only make the application once you are sure they suit your requirements and financial situation.
- Consider what type of credit you are applying for, who the credit provider is, and the impact this could have on your credit score.
- Actively monitor and check your credit file for errors, making sure to alert providers and credit reporting bodies if you believe the information they hold is incorrect.
Finally, it does help to understand the key elements that influence a credit score. Our Learning Hub article How is my credit score calculated is a good place to start.
Myth: Making all my Buy Now, Pay Later repayments on time will improve my credit score.
Truth: Buy Now, Pay Later providers do NOT report to credit reporting bodies in Australia. Making on-time repayments to Buy Now, Pay Later providers is financially responsible, but unfortunately will NOT help to improve your credit score.