How to fix your credit score in 5 easy steps
Now that Australian banks are including positive credit behaviours in their reports to the credit bureaus, it’s much easier than it used to be to fix your credit score.
So even if a few late payments or even a default knocked you back a few points, there are ways to work your way back into better credit territory.
Here are the steps you’ll need to take to fix your credit rating and get it pointing in the right direction.
1. Know thy credit score
It’s hard to get from point A to point B if you don’t know where you currently stand. Credit Simple gives you your credit score – courtesy of credit bureau illion – in the form of a dial that shows you how far away you are from a perfect credit rating.
You can also see your credit report, which contains the actual loan records that illion uses to calculate your credit score. That means you can see exactly what’s helping it and exactly what’s hurting it.
There are other credit bureaus in Australia and you can request your credit score and credit report from any one of them.
2. Dispute any reporting errors
If your report says you defaulted on a payment to your mobile phone company but you know you never did, you can take it up with the credit bureau or the phone company itself. Same with other lenders.
They’ll investigate the matter and remove the negative incident if they find there’s been an error.
Credit Simple conveniently lets you raise a dispute right through the website.
3. Fix your own mistakes
Look through your credit report and see if there are any late payments you may have forgotten about.
If a late payment of $150 or more is more than 60 days overdue, your lender can report it as a default. This will stay on your record for five years, so you can see how important it is to nip late payments in the bud.
4. Pay your bills on time
Now that you’ve cleared up any errors and took steps to minimise further damage, it’s time to start building your credit score back up. The good news is that Australia’s new credit reporting scheme rewards you for doing the bare minimum of paying your bills on time!
The easiest way to do this is to set up direct debit. This will allow your payments go through automatically while you sit back and watch your credit rating start to tick back upward.
5. Stay credit active
Lenders want to see that you’re a responsible borrower and the only way to prove that is to have a healthy amount of debt (and of course, to make your payments on time). Certain loans, like home loans, will often boost your score just because you have it.
Others, like quick cash loans or certain credit cards, will lower your score temporarily. However, if you pay them on time they can serve as a good stepping stone toward the more desirable loans and your score may eventually rise even higher than before.
Fixing your credit score is easier than ever
Unless you have a perfect credit rating, there’s always room to improve. And with positive credit reporting happening in Australia, fixing your credit score is easier than ever. There’s no better time to get started than now – the future you will thank you.
The information in this blog post is general in nature and does not constitute personal financial or professional advice. It is not intended to address the circumstances of any particular individual. We do not guarantee the accuracy and completeness of the information and you should not rely on it. Before making any decisions, it is important for you to consider your personal situation, make independent enquiries and seek appropriate tax, legal and other professional advice.