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Getting to know your credit

If you’re looking into how to improve your credit score, then chances are you are suffering from the effects of a poor credit ranking. Surprisingly enough, good or bad credit can affect most financial choices in your life and the options available to you. For example, did you know that a lender may offer you a better interest rate if you have a higher credit score? It’s for these reasons that understanding your credit report and how it affects your score is a crucial financial skill for the future. So, let’s dive in!

What is a credit score?

First things first: what is it? Your credit score is a number from 0 to 1,200 (or 1,000, depending on the credit bureau) that represents your creditworthiness. The most commonly used credit bureaus in Australia are Experian, Illion, and Equifax. Each of them has its own secret algorithm that bases your credit rating on multiple factors such as your:

  • Previous payment history;
  • Open credit accounts; and, 
  • Negative entries (such as missed payments or defaults). 

Every time you apply for a loan, your lender will check your credit score and base their offer on said number. With a higher credit score, you can have better access to cash flow and lenders can possibly offer you a lower interest rate. It is still possible to apply for a loan with a bad credit score. However, as a more risky borrower, you will likely pay more in interest. That’s why it’s important to improve your credit score before you apply. 

How can I check my credit score?  

Before applying for finance, it’s best to check your credit report. In short, this will let you know if you need to improve your credit score to increase your chances of getting approved. You can download a free copy of your credit report once a year from each of these credit bureaus:

There are also additional services you can pay for that will enable you to access and view your credit scores more frequently. The most important thing to remember is that your credit score will vary between bureaus. So, make sure you look at your ranking with a few different ones to know where you stand. 

How can I improve my credit score? 

The good news is that you can improve your credit score. The bad news is that it may take some time until it shows. Here are 6 simple tips to help you boost your ranking:

1. Check your credit report information 

Although it may seem minor, incorrect information can seriously affect your credit score. For example, if you have recently moved houses but haven’t changed your address with a current lender, two conflicting addresses may be registered on your credit report causing your score to drop. Additionally, you should check if all accounts and repayments are listed correctly. Watch out for duplicate entries, the correct repayment amounts, and if your name and address are spelled correctly. 

2. Always update your details. 

Next time you move houses, make sure that you update your details straight away to avoid confusion. Of course, you should change your address on your driver’s license. However, it is equally important that your lenders, banks etc. know your new address as well. You can also proactively provide this information to the credit bureaus to make sure your data is up to date. 

3. Always pay your debt. 

Missed or late payments will be recorded in your credit report and can leave a negative mark on your score. If you’re likely to forget payments every now and then, you should consider setting up an autopay system for your bills. It only takes a few minutes and once it’s done, you won’t have to think about it again. 

Bonus tip: Always pay your fines! A parking ticket you forgot to pay 6 months ago will eventually turn into a default and may show up in your credit report. 

4. Keep the balance on your credit cards low. 

Keeping a balance on your credit card will cost you money and can affect your credit score. While it’s absolutely okay to carry a low balance into the next month, maxing out your credit card may cause your numbers to drop. Therefore, make sure to keep an eye on your spending habits. 

5. Don’t close old credit accounts. 

Having a long history with a credit provider is seen as a sign of trust. Therefore, it is sensible to keep old credit accounts open even when you are not using them at the moment. 

6. Don’t apply for multiple loans at once. 

Each time you apply for credit, a credit enquiry is created on your credit report. Several credit enquiries will cause your credit score to drop. While it is not noted if you have been approved for any loan, applying for multiple credit accounts at once will make a bad impression. If you are after multiple loans, try to space the applications out as much as you can. 

What affects my credit score? 

There are a few factors that contribute to your credit score. You can review each of them in your credit report. Each credit bureau has its own algorithm that calculates your credit score. However, we know these factors majorly affect the outcome: 

  • Credit accounts
  • Repayment history
  • Defaults
  • Credit applications
  • Bankruptcies and debt agreements
  • Credit report requests

Looking for a personal loan? Apply with Jacaranda Finance!

If you’ve been looking at how to improve your credit score so that you can get approved for a loan, look no further. Jacaranda Finance is an online lender with a fresh approach to credit. We look at several factors as well as your credit score when assessing your application. This means you’ll be guaranteed a fair assessment, regardless of your ranking. Simply apply online and you could receive an outcome within 60 minutes!2 No stress, no fuss. Just simple and straightforward personal loans. 

Different types of loans 

With Jacaranda, you can apply for a range of different loans. Here are our main loan offerings: 

Loan type What it can be used for
Personal loan  Big bills, medical expenses, big purchases, a wedding, a holiday, vet bills 
Secured personal loan  Even bigger purchases, home renovation
Consolidation loan  To consolidate multiple debts into one single payment 

Who can apply?

To be eligible for a loan with Jacaranda, you must: 

  • Be at least 18 years old; 
  • Have Permanent Residency or be an Australian citizen; 
  • Have received an income for 90-days prior to applying; 
  • Have regular income coming into an online banking account;
  • Have an active mobile number and email address. 

Why Jacaranda?

At Jacaranda Finance, we like to treat our customers like family. Our team cares about your finances, that’s why we offer loans that are perfectly tailored to your needs. We know you don’t want to spend time standing in queues waiting for your loan to get approved. So, our application process is super fast and 100% online. You can apply from the convenience of your home, or anywhere else in Australia, within just a few minutes. Our team will get back to you as soon as possible and let you know if we can make you an offer. Any additional questions? Simply shout (or check out our FAQs).

Written by: Jacaranda Team