9 Ways to Improve Your Credit Score

Poor credit is a common issue for millions of Australians. Of those who have been denied a credit card, 21% is because of poor credit. A below-average credit score can affect the majority of your financial choices, including borrowing money and taking out other forms of credit. 

And yet, despite how important a credit score is, 73% of Australians have no idea what theirs is; nearly half (48%) have never checked it, and 6% don't even know what a credit score is!

While poor credit can feel like an unshifting burden, there are ways to improve your ranking and turn things around in your finances. In this article, we’ll provide our top tips on how you can improve your credit score.

On this page:

• What is a credit score?
• Why is my credit score important?
• How can I check my credit score?
• What affects my credit score?
• Top tips to improve your credit score
• Comprehensive Credit Reporting (CCR)

What is a credit score?

Your credit score is a number that represents your financial position when it comes to borrowing money. In Australia, you can request your credit score from multiple credit bureaus, such as:

• illion
• Equifax
• Experian
• Talefin

Depending on the credit agency, your score will be graded against a category. The table below shows the score categories as of 2024. Note that each bureau has slightly different names for each band, so we’ve used Equifax's credit score range as a guide:

	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

Each of these bureaus uses its own algorithm to form your credit rating based on your financial activity. This includes factors like:

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

These bodies legally have to report positive credit entries alongside the negatives - a scheme known as comprehensive credit reporting.

Why is my credit score important?

Each time you apply for a loan, your lender will check your credit score and base their offer on how you rank. A higher credit score can show that you are a less risky borrower and could grant you access to a better loan rate or borrowing amount. 

On the other hand, a poor credit score could see you being declined for credit or having to borrow at a higher interest rate. As such, it’s always a good idea to try to improve your credit before applying if you’re able to do so.

Did you know: Jacaranda Finance doesn’t base our loan decisions on one score? We believe in fast and fair loans and assess applicants based on their recent financial history as a whole.

How can I check my credit score?

Before you apply for credit, it’s a good idea to check your credit score. You can do this one of two ways:

1. Use an online credit checking service like Credit Savvy or Tippla to check your rating for free
2. Download a copy of your full credit report from one of the three aforementioned credit reporting agencies (note: you can access one free copy of your report every three months, and additional copies for a small fee).

Again, don’t be alarmed if you find your credit score varies depending on the platform - each credit scorer uses a different algorithm to measure credit, meaning it’s normal to have differing rates.

Check your credit score with Jacaranda

Jacaranda Finance customers can now check and monitor their credit scores for free every month. Log in to either the FastMoney app or customer portal: it’s free for current customers and won’t impact your credit score.

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What affects my credit score?

There are a number of factors that contribute to your credit score, each of which can be reviewed in your credit report. Each credit bureau has its own algorithm that calculates your credit score; however, the main factors that majorly affect the outcome are:

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

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How can I improve my credit score? 

Though some people may not believe it, improving your credit score is possible. While improvements may take a while to show on your report, there are ways to chip at it over time to see results.

Jump to each tip below:

1. Check your credit report
2. Maintain updated details
3. Avoid missing repayments
4. Pay off old debts
5. Lower your credit card limits
6. Keep good credit accounts open
7. Close bad credit accounts
8. Minimise loan applications
9. Create stability in your life

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1. Check your credit report regularly 

Checking your credit report for inaccuracies or incorrect information can make a huge difference to your score. Things like duplicate entries, incorrect repayment amounts, and even incorrect spelling of your name or address could have an impact on your credit score.

In addition to inaccurate or outdated information, there may be entirely false listings. Applications for credit that you never completed could indicate identity theft and should be flagged with the relevant credit bureau immediately.

Important: Some people believe checking their credit score too often will lower it, but Equifax says this is not true and recommends regular checkups. 

2. Maintain updated details

Whether you’ve moved house or changed your name, you should update your details with all of your credit providers and banks to ensure your details are up to date. You should also make sure your direct debits and regular bank transfers are all up to date if you change card numbers or bank accounts, as this is an easy way to miss repayment deadlines.

3. Avoid missing repayments

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, consider setting up an autopay system for your bills. Having automatic deductions can relieve any stress associated with repayments and cover you if you forget your due dates. 

Remember: Smaller things like unpaid parking tickets can become defaults and may appear on your credit report later.

4. Pay off existing debts

Paying off current debts you owe, like a credit card or other personal loans, should also be a top priority if you’re looking to improve your credit score. One way to do this is through a debt consolidation loan that can combine several debts into one manageable repayment.

5. Lower your credit card limits

Lowering your credit card limit means keeping an eye on your spending to ensure you don’t max out - and repaying your card each month is a quick way to demonstrate responsible borrowing.

High credit limits can also be seen as potential debts when applying for a loan, so think about whether you can reduce yours a bit.

6. Don’t close positive credit accounts 

Having a long (and positive) history with a credit provider is seen as a sign of trust. Therefore, it’s not a bad move to keep old credit accounts open, even when you’re not currently using them.

7. Do close negative credit accounts 

However, the above advice only applies if you have a positive history with that account. 

Say, for example, that you used a credit card where you frequently accrued high-interest debt: it would be more beneficial to cancel that card once you’ve paid off what you owe, as having it open probably isn’t good for you. 

8. Minimise loan applications

Every time you apply for credit, a credit enquiry is created on your report - and several credit enquiries can cause your credit score to drop. While it’s not noted whether or not you’ve been approved for these applications, applying for multiple credit accounts at once can make a bad impression. 

If you need multiple loans at the same time, try spacing out your applications as much as possible, or consider getting one larger personal loan instead.

At Jacaranda Finance, you can check if you qualify for one of our loans before you apply without affecting your credit score!

9. Create stability in your financial life

Lenders generally like to see evidence of stability in a potential customer. This means a stable job history, stable living situations etc. People who frequently change jobs, for example, might be seen as higher risk, as there could be a greater chance they lose their income and thus their ability to service a loan.

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Understanding your credit score is the first step in taking control of your finances. While a negative score is never desirable, it’s important to remember that there are ways to improve it. Keep the above tips in mind next time you’re checking your credit score and start your journey to a new financial you today.

Improve your credit score with Jacaranda Finance

Not only do we make checking your credit score easy at Jacaranda, but we want to help you improve it too! Thanks to Comprehensive Credit Reporting (CCR), you could do just that.

Jacaranda Finance now reports data under the CCR regime. This means we provide a more detailed and comprehensive view of your credit history to credit bureaus. CCR now makes it much easier to rebuild your credit history. By applying for and repaying one of our loans on time, your credit score could increase faster than ever.

We want to help one million Australians improve their credit scores. So, apply for one of our loans and start tracking your credit score progress (for free) today! We offer same-day approvals² on most applications.