How to boost credit score in Australia

A credit score of 700 or greater can give you access to financing at low interest and flexible repayments. To qualify for a loan, the minimum threshold is 500. However, if you have a more modest credit score, you can improve it over time. Here’s how.

How do credit reporting agencies calculate your credit score?

Your credit score is determined based on your credit report which contains information on your existing debts, number of credit enquiries you may have made, outstanding loans, missed payments, debt in collections, bankruptcy, etc.

What is a good credit score?

Depending on the credit reporting agency you choose, your credit report may show scores out of 1200 or 1000. If your score is 661 or higher out of 1200, you have a good credit score whereas anything above 540 is considered a good score if the maximum is 1000.

How can I raise my credit score real quick?

The key is to pay off or consolidate your outstanding debt as soon as possible. However, there’s no way to say raise your credit score 200 points in 30 days. In fact, it can take up to 7 years to improve your credit score, depending on how far behind you are on your payments. Awareness is often the first step to improving your credit score.

Ensure that you monitor your credit score regularly for sudden changes. It may be because of a reporting error or indicate foul play. For example, a credit card you may have paid off long ago may still show up as outstanding due to a reporting error. Alternatively, it’s possible that your identity may have been stolen and a perpetrator may be misusing your credit.

By now, you’re probably wondering, “What increases credit score most?” Here’s the answer in a nutshell: keep track of your debts and repay them on time.

Best practices to follow in order to improve your credit score:

Don’t take on more debt than you can handle:

When starting a business, it is important that you stick to your business plan. Use business loans judiciously for adding capacity or paying for essential items until your income stabilises. If you take on more debt, you may be forced to skip payments which will affect your credit score and make it harder to obtain credit in future.

Lower the limit on your credit card: 

Having a high credit limit increases your credit exposure. Check the average balance on all your credit cards and lower the credit limits accordingly.

Talk to your loan provider:

If you’re unable to keep up with your repayments, let your loan provider know. You may be able to negotiate a payment plan with them and possibly avoid negative credit report.

 

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