How to Improve Credit Score Australia

One of the most significant indicators of your financial health is your credit score. It provides lenders with a quick overview of your credit usage habits. Your chances of getting new credit lines or loans approved increase with your score. When you borrow money, having a higher credit score can help you get the best interest rates.

There are a few quick and easy things you can take to raise your credit score. You may begin working for a higher credit score in a matter of hours, even though it can take a few months to see results.

Better credit scores are associated with lower-risk consumers, and as a result, more banks are vying for their business by providing better interest rates, costs, and benefits. On the other hand, borrowers with low credit scores are viewed as higher-risk customers, and as a result, there is less competition among lenders for them, allowing more companies to charge exorbitant annual percentage rates (APRs).

How to Build Good Credit

Fortunately, there are a few actions you may do to raise your credit score. You might spend weeks or months working on some of them. Others can be completed in a single day and will hasten the improvement of your credit:

1. Examine your credit reports.
2. Take control of your bill payments.
3. Don’t use more than 30% of your available credit.
4. Limit fresh credit requests.
5. Keep your old accounts open and deal with delinquencies.
6. Think about getting your debts consolidated.

You may raise your credit score and establish good credit by taking small, steady steps. Here’s a closer look at what’s involved in each step of the process to build good credit and how long you can expect each step to take.

1. Examine your Credit Reports

Estimated time: 1-3 hours

Examine every report to determine what is raising or lowering your score.

A history of on-time payments, low credit card balances, a variety of loan and credit card accounts, older credit accounts, and few credit inquiries are all factors that go toward a higher credit score. Credit score detractors include judgments, collections, late or missed payments, and large credit card balances. 

When is the right time to check your credit score?

Regularly checking your credit score for inaccuracies is a good idea, but to avoid negatively affecting your score, make sure to do mild inquiries. Check to see if you can sign up for your bank’s free credit monitoring program so you can receive notifications if your credit score changes. Many banks offer this service to their customers.

How can you quickly improve your credit score?

You probably won’t see a significant improvement in your credit score overnight. But, you might expedite the process by lowering your credit utilization percentage by paying off as much of your revolving credit as you can, having incorrect information removed (particularly late payments), or being added as an authorized user to someone else’s old account with a flawless payment history—ideally with a low utilization rate—in order to expedite the process. A friend or relative should ideally do this; they don’t even need to give you the card.

2. Take Control of your Bill Payments

Estimated time: 1-2 hours

As you can see, payment history has the largest influence on your credit score. For this reason, paid-off debts (like your former student loans) should ideally remain on your record; if you pay your debts responsibly and on time, this will work to your advantage. Consequently, avoiding late payments at all costs is a straightforward method to raise your credit score. Some strategies for doing so include:

• Creating a filing system, either paper or digital, for keeping track of monthly bills
• Setting due-date alerts so you know when a bill is coming up
• Automating bill payments from your bank account

Another option is charging all (or as many as possible) of your monthly bill payments to a credit card. This strategy assumes you’ll pay the balance in full each month to avoid interest charges. Going this route could simplify bill payments and boost your credit score if it results in a history of on-time payments.

3. Don’t Use More than 30% of your Available Credit

Estimated time: 1-2 hours

The percentage of your credit limit that you use at any particular time is known as credit usage. 

Paying off your credit card debt in full each month is the easiest method to manage your credit utilization. A solid rule of thumb is to maintain your total outstanding balance at 30% or less of your entire credit limit if you are unable to achieve that every time. You can then focus on reducing that to 10% or less, which is the best amount to pay off on your credit report. 

Tip: Use your credit card’s high balance alert feature so you can stop adding new charges if your credit utilization ratio is getting too high.

Another way to improve your credit utilization ratio is to ask for a credit limit increase. Raising your credit limit can help your credit utilization as long as your balance doesn’t increase in tandem.

Most credit card companies allow you to request a credit limit increase online; you’ll just need to update your annual household income. It’s possible to be approved for a higher limit in less than a minute. You can also request a credit limit increase over the phone.

4. Limit Fresh Credit Request