How to Improve Credit Score

If you want a better financial future, then it is worth spending some time understanding how you could improve your credit score

The first step towards building your credit rating is to assess where it stands today. GetCreditScore can help you obtain an overview of your credit report in a matter of minutes. Use our powerful online platform to start monitoring your financial health now!

Having an overview of your credit report helps you understand how credit providers view you and where you can make improvements. You can even take advantage of the information available on your credit report to evaluate your eligibility for credit services. 

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What factors affect your credit score?


Your credit score is based on the information on your credit report – a document that contains extensive data about your credit history. This file maintains records of your credit repayment history, credit applications, outstanding debt, defaults, and other similar financial factors over a specific period. It is supplied to credit providers to verify your identity and evaluate your credit applications.

Equifax utilises proprietary algorithms to calculate your credit score. A good credit score indicates to lenders that you are reliable as a borrower. Here are a few factors that can affect your rating to give you an idea of how to improve credit score:

Credit enquiries. A credit enquiry is added to your record every time a creditor obtains a copy of your file for evaluation. If numerous credit enquiries appear on your credit report in short succession, it can hurt your credit score.
Credit provider. The type of credit provider making an enquiry on your report can influence your credit score to varying degrees. That means alternative lenders may have a more significant impact on your credit score than traditional lenders.
Credit type. The type of credit you apply for is another factor that affects your credit score since it reflects the risk involved. 
Personal details. Your credit score factors in personal details to determine your borrowing capacity. That means , for example, that your rating may increase if you receive a regular income.
Default information. The key to maintaining a good credit score is avoiding defaults, clearouts, or serious credit infringements. If you can manage to eliminate default information on your credit report, your credit score may increase significantly.

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Why should you maintain a good credit score?


Your credit score is usually the first thing creditors consider when assessing your eligibility for their products and services. It is also one of the factors they take into account when setting the interest rate to charge you. That means having a good credit score entitles you to competitive rates for loans, mortgages, and credit cards. 

Equifax rates credit scores on a scale and classifies credit report holders as follows (note that the score ranges for each classification are approximate, as these numbers change periodically):

Excellent (≈841–1,200): This credit score range comprises some of the most influential consumers in Australia. These people are unlikely to face an adverse financial event – such as a default or bankruptcy – over the next year. 
Very Good (≈756–840): Those with credit scores in this range are twice as likely to maintain a clean credit report over the next year than the average consumer.
Good (≈666–755): This credit score range consists of individuals who are more likely to keep a clear report over the next year than the average consumer. 
Average (≈506–665): Those with credit scores in this range are likely to experience an adverse financial event over the next year.
Below Average (≈0–505): The individuals in this credit score range are more likely to experience an adverse financial event over the next year than consumers in the higher categories.

Unaware of your credit score? Let us help you find out!

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How to improve your credit score?


In Australia, the Comprehensive Credit Reporting (CCR) system gives you more power to influence your credit score. This enhanced system mandates the addition of more information on your credit report so that credit providers can get a clearer picture of your financial standing. It also drives market competition, compelling creditors to offer more reasonable interest rates based on your positive credit history.

The Comprehensive Credit Reporting system discloses the following positive information on your credit report:

Credit account history: This information summarises your active credit accounts, their issuance dates, and their credit limits. It also provides details of these accounts, including the credit providers holding them and their respective terms and conditions.

Repayment history: This data represents your credit account payments over the past two years. If you have been diligent in fulfilling your credit obligations, the inclusion of this record may positively impact your credit rating.  If you’re looking for a credit boost or how to fix bad credit, the following are two of the most effective methods on how to improve credit score:

Automate your repayments: The best way you can demonstrate your dependability to creditors is to stay on top of your bills. You can set up direct debits online or set calendar reminders to ensure you never miss a payment again. 
Examine your credit report: Check your credit report to make sure there are no errors. If you spot a lender or a debt unfamiliar to you, contact the credit provider responsible for the entry immediately.

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Disclaimer: The information contained in this article is general in nature and does not take into account your personal objectives, financial situation or needs. Therefore, you should consider whether the information is appropriate to your circumstance before acting on it, and where appropriate, seek professional advice from a finance professional such as an adviser.