10 Habits of People With Good Credit Scores

Unfortunately, many Australians have low credit scores, or their credit score might be lower than they’d like. If you’re reading this, you might be one of them.

A low credit score can happen for many reasons, and it doesn’t mean you’re bad with money. All it takes is one major setback to send your credit score plummeting, and it can take years to bring it back to where it was.

If you’re looking for a better credit score but aren’t sure where to start, here are ten habits commonly practised by people with good credit scores.

On this page:

• Why do you need a good credit score?
• What is a ‘good’ credit score?
• The 10 habits of people with good credit scores
• Improve your score with Comprehensive Credit Reporting
• Check if you qualify - without impacting your credit score

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Why do you need a good credit score?

Your credit score can affect your life in more ways than you may realise. A credit score is essentially a ‘rating’ of your creditworthiness when you apply for a financial product like a home loan, personal loan or credit card. 

Most lenders typically have minimum credit criteria for their best products, and a lower credit score might limit you to a loan with higher interest rates and fees, less flexible loan terms and more. However, a higher credit score can improve your chances of a successful loan application and grant access to better rates and loan terms. It can also open the door for greater financial opportunities in the future. 

In a highly digitised financial world, accessing good credit quickly when you need it can make life easier.

What is a ‘good’ credit score?

In Australia, credit scores can range between zero and 1,000 to 1,200. A ‘good’ credit score is subjective as it will depend on which of the main Credit Reporting Bodies you’re using: Equifax, Experian, or illion. 

Each of these companies uses a different formula when calculating your credit score, but a good credit score will generally be at least 600 (500 with illion). Here's what the different credit score ranges look like as of 2023:

	Equifax	Experian	illion
Below Average	0 - 459	0 - 549	1 - 299
Average	460 - 660	550 - 624	300 - 499
Good	661 - 734	625 - 699	500 - 699
Very good	735 - 852	700 - 799	700 - 799
Excellent	853 - 1,200	800 - 1,000	800 - 1,000

Data from Finty suggests the average credit score across all states and territories in Australia is about 657.

The 10 Habits of People with Good Credit Scores

We’ve summarised ten habits people with good credit scores commonly have below.

It's important to note that while these habits are commonly associated with good credit scores, individual experiences and circumstances can vary. Not everyone with a good credit score will do all of these things.

Click the following links to jump to each:

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1. Timely payments

Late or missed payments can have one of the most direct negative impacts on your credit score. According to Experian, as much as 35% of your credit score is comprised of your repayment history, both good and bad.

People with good credit scores consistently pay their bills on time, be it for credit cards, loans, or utility bills. Timely payments also reflect financial responsibility and discipline.

Set up direct debits or calendar reminders to ensure you never miss a due date.

2. Not using all their available credit

Using a lower percentage of your available credit (or a lower ‘credit utilisation ratio’) can be viewed more favourably by credit bureaus and lenders. If you have a credit card with a credit limit of $20,000, you don’t need to use that entire limit every payment cycle. Use only what you need.

3. Having a decent credit history

Lenders may feel more confident lending to people with established credit histories. Maintaining older accounts and a diverse mix of credit types often showcases a long and responsible credit management history.

However, remember that you don’t need an established credit history to apply for a loan. If you have an old credit account that caused you trouble in the past (such as a payday loan or a credit card you took ages to pay off), closing these accounts can be more beneficial.

4. Limiting applications and credit enquiries

Every time you apply for new credit, a 'hard enquiry' is recorded. Multiple enquiries within a short time can indicate a lack of financial discipline to lenders when you apply, leading to failed applications.

When shopping for loans, do your research and apply selectively, taking care to ensure the product in question suits your needs.

Read more:

5. Regularly checking their credit score

One of the biggest myths people believe about credit scores is that checking it regularly will lower your score. Equifax says this is false, as checking your credit score only involves a ‘soft credit enquiry’ that does not appear on your credit report. In fact, checking your credit score frequently is one of the best ways to keep it high.

Don’t just take our word for it. Recent data released by Experian shows a 42% increase in people checking their credit reports and scores since April 2022 - a record high. According to Rob Hayhurt, head of credit risk at Great Southern Bank:

“Australians that check their credit score may have a better sense of their financial position and, if needed, they can then take steps to improve their score and the likelihood of being approved for a loan.”

By checking your credit score, you can assess where you’re at financially, track progress when you’re improving your score, and avoid applying for loans you’re unlikely to be eligible for. It’s also a good way to check there are no errors or discrepancies on your credit report.

You can access your credit report for free once every three months from the different credit reporting agencies and other credit services like Credit Savvy and Tippla.

6. Managing debt

Not all debt is bad. Some debts, like home loans or student loans, are considered good debts because they’re an investment in your future. But people with good credit scores are less likely to have outstanding ‘bad debts’, like a credit card, Buy Now, Pay Later (BNPL) or other personal loans.

Paying off current debts you owe should also be a top priority if you’re looking to improve your credit score. For example, rather than paying your minimum repayment amounts on a credit card, consider making increased repayments or paying off the balance in full if you can.

Another way to make your debts more manageable is through a debt consolidation loan, which combines several debts into one manageable repayment.

7. Budgeting & setting financial goals

Those with higher credit scores are generally more likely to set - and stick to - financial goals, often achieved through budgeting and saving. This habit ensures they live within their means and avoid overextending financially, as they keep a closer eye on the money they have available and where it all goes.

They’re also more likely to have an emergency savings fund they can use if necessary rather than take out more loans to cover short-term expenses.

Use budgeting apps or tools to track your spending habits and identify areas of potential savings if you’re struggling with this part.

8. Avoiding defaults and ‘bad credit’

Defaults can have a lasting negative impact on a credit score, staying on there for years. Addressing any financial difficulties you’re facing with your credit provider before they escalate to this point is crucial.

Wage advances, payday (short-term) loans, and similar products can also negatively affect your credit score, as these products can increase your chances of being rejected by a lender. They’re also statistically more likely to lead to missed repayments and defaults: research from major bank NAB shows one in 10 Australians facing financial hardship had accessed a payday loan within a three-month period.

Reach out to your lender(s) if you’re facing financial hardship, as they are legally obliged to discuss flexible payment options with you to help alleviate your problems and help get you back to a position where you can make full repayments again.

9. Consistent personal details

Keeping the details in your credit report consistent, or updating them when they change, can positively impact a credit score. People with high credit scores tend to have more stability in their lives, such as:

• Not moving house often
• Keeping the same job
• Maintaining a steady income

And more. Some lenders might see frequently changing addresses or jobs as a sign of instability, and they’ll often have their own rules as to how often you’ll need to be in a job before they accept your application.

If you move or change jobs, quickly update your details with all financial institutions.

Read more:

10. Staying informed and doing their research

Knowledge is power when it comes to managing credit. As well as checking their credit score and report regularly, Australians with good credit scores are more likely to stay updated about changes in credit scoring models and regulations.

When they’re ready to apply for a loan or credit product, high credit score owners will also take the time to research and compare multiple different products and providers, looking at the rates, fees and flexibility on offer.

Before applying for any loan, reviewing your budget and ensuring you can comfortably meet the repayments is essential. One way you can do this is to use a loan repayment calculator to get an estimate of what your repayments might be.

You can give our loan repayment calculator a go to see what you can afford to pay.

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How Jacaranda Finance can help

Your credit score does not define you as a person. But there’s no denying that having a higher credit score can make life easier, while a low credit score can hold you back for years. Fortunately, your credit score can always be improved, even if it takes time.

At Jacaranda, our goal is to allow you to unlock new financial opportunities in the future. Here’s how we can help increase and protect your credit score.

Check if you qualify - without impacting your credit score

As mentioned, applying for credit can result in a hard credit check being conducted, which will appear on your credit report. While making an application here and there generally won't impact your credit score, doing so too often could result in it dropping.

But with Jacaranda Finance, we allow you to first check if you qualify for one of our loans in a way that does not impact your credit score.

If you meet our eligibility criteria, we'll let you know on the spot. You can then choose to move forward with applying. If not, then no harm done!

Improve your score with Comprehensive Credit Reporting

Jacaranda Finance also reports data under the Comprehensive Credit Reporting (CCR) regime.

This is yet another way we could help build your credit score over time: by applying for and repaying one of our loans on time, your credit score could increase faster than ever.

Learn more about how Comprehensive Credit Reporting with Jacaranda could help you.

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The information on this website is for general information only. It should not be considered professional advice from the website owner - Jacaranda Finance. Jacaranda Finance is not a financial adviser, and the content on this page does not consider your objectives, financial situation or needs. You should consider seeking independent legal, financial, taxation or other advice to check how the website information relates to your unique circumstances.

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