How to improve your credit score in Australia in 2024
If you’re planning on applying for a home loan or a personal loan, prepare to have your credit history placed under the microscope. Your credit history tells the story of you as a borrower, even things that took place a long time ago. Lenders use this information to determine to determine whether or not your application will be successful and of course, the interest rate.
However, it's not uncommon for Aussies to have a couple of blunders on their credit history, so don't fret just yet. Below, we've compiled a few tips to help you boost your credit score and get you back in good financial standing.
1. Get a copy of your credit report
The first thing you should do is get a copy of your credit report. In Australia, there are a number of credit reporting bodies you can contact to do this, but the main ones are Equifax, Experian and CheckYourCredit.
As a general rule, you can request a free copy of your report once every 12 months or more frequently in certain circumstances, such as if you’ve been refused credit in the past 90 days.
2. Make sure there aren’t any errors
Once you’ve received your credit report, you’ll need to comb through it to ensure there aren’t any errors or listings to contest.
Things to look out for:
- Inaccurate or old information: Sometimes, banks or lenders record inaccurate information or issues that have already been resolved. If this happens to you, you'll need to contact them to ask to have the listing removed. If there is indeed a mistake, then they'll get in touch with the credit reporting body so they can wipe it from your report as well.
- Identity fraud: Another thing to watch out for is identity fraud. This is why it's a good idea to check your report even if you aren't worried about your credit score. You don't want to be blindsided by news that someone has taken out a bunch of credit cards in your name.
3. Pay off any outstanding debts
Nothing will tarnish your credit score like unpaid debt, so if there's a bill you should have paid but haven't, put it at the top of your priority list.
If the bill is $150 or more and at least 60 days pass since a debt collector contacts you, it will be listed as a credit default and stay on your report for five years.
Even if you pay it off, your report will still include mention of the default, though it will be amended to state that it's since been paid.
Obviously, it's best not to let it get to that point, but if this is the position you've found yourself in, those debts are better paid late than never.
4. Pay your bills on time
It should go without saying that you should aim to pay all future bills promptly, so think about setting up a direct debit if you haven't already.
Recent changes to credit reporting practices mean lenders have a more complete overview of your credit history, not just the bad stuff like infringements and defaults.
All your credit product applications, repayment amounts, and whether or not you make repayments on time feature on your report, which means there are more opportunities to win lenders’ favour if you’re responsible with your money. While you can’t undo past mistakes, lenders will notice if you’re on the right track.
Top tip: Moving apartments? Make sure your bank and utility companies know so they can update your details. The last thing you need is your bills going to the wrong address, as occupants of your old place are more likely to put them straight in the bin than to track you down.
5. Minimise new credit applications
There's a reason why you shouldn't apply for too many credit products. Each time you do, you rack up what's known as a 'hard enquiry.'
A hard enquiry is when a potential lender requests access to your credit history before doing business with you, and each request gets recorded on your report.
A single hard enquiry isn't anything to worry about. It's when too many are made in a short amount of time that you risk jeopardising your credit score.
This essentially sends a message to lenders that you're financially reckless or desperate for credit, neither of which paints a particularly favourable picture.
6. Consider credit repair
As a last resort, you might consider contacting a credit repair company. These can be costly, often around $1,000, to fix a single listing on your report, so you should only give them a call if you've exhausted all other options.
Remember that it's not uncommon for companies to charge for services that can be handled for free, such as contacting an ombudsman, so exercise some judgement before reaching for your wallet.
While credit repair companies can help remove incorrect information from your credit report, there's very little they can do about negative but factual information. So be wary of companies that claim to be able to scrub your credit history clean.
If this is what you’re dealing with, it’s probably best to start managing your debt instead.
Think about lowering your card limits, putting a stop to any new credit applications, and maybe contacting a financial counsellor for some guidance.
What if I don’t have a credit history?
Your credit history is a record of how you’ve managed credit sources like loans and credit cards in the past. So what if your credit score is low because you’ve never borrowed money before?
Even if you’ve always been responsible with your finances, your word won’t mean much — a lender will want to see proof.
One way to start developing a credit history is to apply for a low-rate or no-annual-fee credit card - and then make your payments on time. If you need help figuring out which card is best for you, head to our credit card comparison page.
Frequently asked questions
What is a credit score?
Your credit score is a number between zero and 1,000 (some credit reporting bodies go up to 1,200). It is calculated by considering how many lines of credit you have open, your repayment history, and your frequency of credit applications, among other things.
Banks pull up your credit score when deciding whether or not to lend you money. The higher your score, the better your chances of getting approved for the loan you want. You might also have access to cheaper rates.
How long does it take to improve your credit score?
Fixing your credit score isn’t something that can be achieved overnight — you’ll need to build up a solid payment history and start cultivating healthy money habits, both of which will take some time.
Start by obtaining a copy of your credit report and reviewing it for any errors or outdated information that might drag your score down. If you can get an incorrect item deleted, you might see quick improvements.
The good news is that if your credit score is low, you might find it’ll respond quite quickly to efforts to turn your finances around, such as by making on-time repayments and limiting how many credit products you apply for.
What credit score do banks like to see in Australia?
If the credit reporting body your bank subscribes to uses scores up to 1,000, then a score higher than 690 is considered excellent, and one higher than 540 is considered good.
For scores that go up to 1,200, a score above 853 will be considered excellent, while one above 661 will be considered good.
Do banks consider how long you have been at a job?
Yes, lenders will be looking for signs of stability beyond how you manage your finances. If you’re not currently employed full-time or regularly hopping from job to job, you might be considered a higher risk.
Once your credit score has improved, you'll be in a better position to apply for a loan, whether it’s for a home, holiday, renovations, or a new car. Check out our home loan and personal loan comparison pages for an idea of what’s currently available.
Personal loan comparisons on Mozo
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Low Rate Personal Loan
Excellent Credit
interest rate
comparison rate
Monthly repayment6.57% p.a.to 8.39% p.a.7.19% p.a.to 8.75% p.a.based on $30,000
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Repayment terms from 1 year to 7 years. Representative example: a 5 year $30,000 loan at 6.57% would cost $35,528.12 including fees.
CompareCompare- interest rate
- 6.57% p.a.to 8.39% p.a.
- comparison rate
- 7.19% p.a.to 8.75% p.a.based on $30,000
over 5 years
- interest rate
- 6.57% p.a.to 8.39% p.a.
- comparison rate
- 7.19% p.a.to 8.75% p.a.based on $30,000
over 5 years
- Upfront fee
- $250.00
- Monthly fee
- $0.00
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Mozo experts choice awards won:
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Unsecured Personal Loan
Fixed
interest rate
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Monthly repayment6.75% p.a.to 26.95% p.a.6.75% p.a.to 26.95% p.a.based on $30,000
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Repayment terms from 2 years to 7 years. Representative example: a 5 year $30,000 loan at 6.75% would cost $35,430.23 including fees.
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- 6.75% p.a.to 26.95% p.a.
- comparison rate
- 6.75% p.a.to 26.95% p.a.based on $30,000
over 5 years
- interest rate
- 6.75% p.a.to 26.95% p.a.
- comparison rate
- 6.75% p.a.to 26.95% p.a.based on $30,000
over 5 years
- Upfront fee
- $0.00
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interest rate
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Monthly repayment6.57% p.a.to 18.99% p.a.7.19% p.a.to 19.39% p.a.based on $30,000
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Repayment terms from 1 year to 7 years. Representative example: a 5 year $30,000 loan at 6.57% would cost $35,528.12 including fees.
CompareCompare- interest rate
- 6.57% p.a.to 18.99% p.a.
- comparison rate
- 7.19% p.a.to 19.39% p.a.based on $30,000
over 5 years
- interest rate
- 6.57% p.a.to 18.99% p.a.
- comparison rate
- 7.19% p.a.to 19.39% p.a.based on $30,000
over 5 years
- Upfront fee
- $250.00
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Express Personal Loan
Secured
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Monthly repayment14.95% p.a.to 27.95% p.a.29.30% p.a.to 42.8% p.a.based on $10,000
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- 14.95% p.a.to 27.95% p.a.
- comparison rate
- 29.30% p.a.to 42.8% p.a.based on $10,000
over 3 years
- interest rate
- 14.95% p.a.to 27.95% p.a.
- comparison rate
- 29.30% p.a.to 42.8% p.a.based on $10,000
over 3 years
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-
Mozo experts choice awards won:
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Secured Personal Loan
interest rate
comparison rate
Monthly repayment6.57% p.a.to 18.99% p.a.7.19% p.a.to 19.39% p.a.based on $30,000
over 5 yearsGet a secured personal loan with competitive low rates for borrowers with excellent credit. A simple fixed interest rate that can be repaid weekly, fortnightly or monthly, over 1 to 7 years (10 years for Green Loans). Managed entirely online, at any time. No monthly account keeping fees, no exit fees and no early repayment fees. Quick and easy, 100% online application. Establishment fees apply.
Repayment terms from 1 year to 7 years. Representative example: a 5 year $30,000 loan at 6.57% would cost $35,528.12 including fees.
CompareCompare- interest rate
- 6.57% p.a.to 18.99% p.a.
- comparison rate
- 7.19% p.a.to 19.39% p.a.based on $30,000
over 5 years
- interest rate
- 6.57% p.a.to 18.99% p.a.
- comparison rate
- 7.19% p.a.to 19.39% p.a.based on $30,000
over 5 years
- Upfront fee
- $250.00
- Monthly fee
- $0.00
- Exit fee
- $0.00
- Late payment fee
- $35.00
- Repayment options
- Weekly, Fortnightly, Monthly
- Early repayment penalty
- $0.00
- Minimum loan amount
- $5,000.00
- Maximum loan amount
- $75,000.00
- Minimum loan term
- 1 Year
- Maximum loan term
- 7 Years
- Security required
- Vehicle
- Other benefits
- -
- Other restrictions
- Interest rates may vary depending on assessment of application. Establishment fee varies from $250 and is based on your OurMoneyMarket loan grade and total loan amount. The fee is added to the principal amount and paid over the loan term.
Read our Mozo Review to learn more about the OurMoneyMarket Secured Personal Loan
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* WARNING: The Comparison Rate combines the lender's interest rate, fees and charges into a single rate to show the true cost of a personal loan. The comparison rates displayed are calculated based on a loan of $30,000 for a term of 5 years or a loan of $10,000 for a term of 3 years as indicated, based on monthly principal and interest repayments, on a secured basis for secured loans and an unsecured basis for unsecured loans. This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.
^See information about the Mozo Experts Choice Personal Loan Awards
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