Key Factors That May Benefit or Hurt Your Credit Score in Australia

Think of your credit score as a dynamic thing, and every time you do a financial transaction (or fail to do one) you make it go either up or down. 

Paid your credit card bill this month on time or before the due date? Your score may go up. Late on paying your mortgage? Your score may go down . 

Every time you pay a bill, apply for a loan or do anything relating to debt, you will push the dial a little bit in one direction or the other. All of these little actions add up, and at the end of the day you’ll be left with either a good credit score or a bad one, which could make a difference next time you go to apply for a credit card or a loan. 

What are the factors that benefit your credit score ?

First the good news! What makes your credit score go up? Quite a few things, actually. Every time you do something to prove you are trustworthy and reliable with credit , you will nudge your credit score up. This includes:

•    Paying all your bills and loans on time (including credit cards)
•    Demonstrating you can handle debt
•    Being consistent over time and maintaining your good financial habits as you get older
•    Managing “good debt” such as a student loan or home loan, and paying them off in a timely manner

What are the negative factors that damage your credit score?

This is the flip side: and there are numerous behaviours or activities that unfortunately can push your credit score down. These include:

•    Applying for credit multiple times
•    Being late in paying bills or loan repayments
•    Failing to pay bills or loan repayments altogether
•    Not fixing errors in your credit report
•    Receiving court summons over unpaid debt
•    Declaring  bankruptcy

How long does it take to fix your credit score?

It all depends on the reason for the low score. If it’s a reporting error on the part of the credit agency or your credit provider, then you could see a fairly quick improvement. If you need to clean up your finances, then it will take longer. 

And, needless to say, if you continue to add negative information to your report (eg by missing credit card or loan repayments) even while making other fixes, then you will not see a positive change in your report. 

To speed things up, try paying off any large credit card debt on or before the due date and dispute any errors you spot on your report.