Module 3: Improving your credit score

“The goal isn’t more money, the goal is living life on your own terms.” 

Chris Brogan


If you are not fully happy with your current credit score, there are plenty of things you could do to build up your credit score. However, be careful of any company that is promising you that it can rapidly repair your credit score or remove overdue accounts. If it is actually possible, you can do this yourself for free, and in other cases, they may overcharge you for something that won’t affect your credit score much at all. 

Building up your credit score takes time and consistency: yes, one big mistake can significantly affect your credit score. However, consistently paying your bills on time and staying on top of your finances could help you build a good reputation with creditors. 

How fast your credit score improves depends on where you are at right now. Getting from a low credit score to a better than the average score may take a while, while improving an average score may be a little faster for you. 

How long does it take to build up your credit score?

No one knows exactly how long it will take to improve your credit score. Even significant negative entries will age over time and get progressively less powerful. However, for most of them, the longest it will take is 7 years until they fully disappear. 

what's on credit report, credit report

Improving your credit score 

There are multiple things you could do to improve your credit score over time. 

Always pay your bills on time. 

Your repayment history makes up one of the most important parts of your credit score. Therefore, consistent timely repayments are the basis for a good credit score. If you already know you may struggle to pay a bill, you could get in touch with your credit provider straight away. They may be able to offer you a solution that works for both sides and protects your credit score. 

Check your credit report for mistakes.

Mistakes are the easiest item to remove from your credit score. They are more likely to happen than you may think, statistically, 1 out of 5 credit scores will have a mistake in it. 

A mistake may look minor to you but it can have a big impact. If you have moved house and didn’t change your address with a credit provider, two different entries can create the same entry twice with contradicting information. This can lower your credit score and, therefore, affect your ability to apply for credit in the future. 

If you do find an incorrect entry in your credit report, there are multiple ways on how to go about it: 

  1. You could contact your credit provider directly and ask them to change the entry. After investigating, the credit provider will then report back to the credit bureau and the change will become visible on your report. 
  2. If the change is about your personal information rather than about enquiries or accounts, you could also directly contact your credit bureau and request a change. 
  3. If you can’t resolve the issue, you could contact a free financial counsellor to mitigate, or directly reach out to the Australian Financial Complaints Authority (AFCA). 

Note: You won’t be able to remove any debts once they have been paid off. They will change their status on your credit report to “paid” but will remain there until they disappear due to their age. 

Always update your contact information. 

When moving house, make sure you change your address for all your credit accounts and with all your credit providers. Having non-matching addresses on your accounts can create conflicting entries that may affect your credit score. 

Keep your credit accounts open.  

It seems contradictory at first to keep too many open credit accounts. However, the age of an account could contribute positively to your credit score. Paying your credit bills of a specific account consistently showcases that you have been capable of dealing with this credit account for a long time already – a good indication for a future credit provider that you are likely to handle credit well. 

You may want to consider keeping at least some of your credit accounts open and in use to provide data for credit bureaus to base your credit score on. You don’t have to go into debt to contribute to your credit history. Instead, you could try and make smaller purchases with your credit card and fully pay off your debt whenever needed. 

Be mindful with credit applications. 

Too many credit applications in a short amount of time will damage your credit score. Instead of shopping around for credit, try and make an informed decision about your credit application and stick to one credit provider. 

Have a good mix of credit accounts. 

Having more than one type of credit shows to credit providers that you are capable of handling multiple credit accounts perfectly fine. Repaying your debt on time could not only improve your credit score but also signal to credit providers that you are good at managing your finances. 

Don’t max out your credit accounts. 

Just because you do have a certain credit limit available doesn’t mean you should necessarily take out as much as possible. If you want to calculate your credit load, start by adding all the money you owe. Take your total monthly payments (including all debt) and divide them by your monthly income. Move the dot two decimal points to the right and you’ve got your percentage. Anything around or below 10% is considered as a great debt-to-income ratio, anything above 20% might become tricky to repay. 

Using your full borrowing capacity may affect your credit score and indicate to credit providers that you may be at a higher risk to struggle financially in the future.