Your credit score is a valuable financial tool.

A higher credit score can help you unlock several benefits including improving your chances of having a loan application approved. Having a positive credit history can put you in a favourable position in the eyes of a lender. Credit scores are often used as part of the assessment in determining  your ability to service a loan.

A higher credit score and positive credit history can also make you eligible for better interest rates. This means you will save a big chunk of money in the long-term, getting you closer to your financial goals.

Here is some practical advice on how to increase your credit score.

When it comes to your credit score, what are the most important factors for improving it?

You might think of steps like promptly paying back debt, limiting credit applications and similar actions to improve your score. However, this is not the complete story.

A good credit score is about consistently demonstrating good habits. When you follow proven strategies and give them enough time to be reflected in your credit report, your score will rise. This means a lender may be more willing to work with you.

Keeping that end point in mind — the need to be consistent and really commit to good habits in the long run is important — review the following tips for boosting your score. First, we'll get on the same page with a few basics.

Taking stock: your current credit score

Having a credit score in the average-good band is a big plus. It means lenders see you as relatively responsible and reliable. You may already have had an easier time of qualifying for things like a home loan, personal loan or new credit card from a lender or credit provider. And, you'll often avoid the high interest rates and especially strict terms and conditions a credit provider will frequently put in place for those with lower scores.

However, you can look for new ways to raise your score and make sure the good credit habits you have stay strong and are properly reflected in your credit history.

Remember, it takes time for your hard work to show up on your credit file. Depending on the exact type of info, details remain on your report for 2-5 years. Your score won't go up overnight, but it can eventually reflect a long history of responsible decisions with a much higher score — as long as you put in the time and effort.

Building even better credit

Here are some of our tips that are all proven to push your credit score in the right direction.

1. Pay your bills on time
   We've already touched on this tip, and it really is one of the most effective when it comes to boosting your credit score. Prioritise getting that credit card balance down to zero each and every month.
   Of course, life gets in the way and paying every single bill on time isn't always feasible. However, there are some key strategies that you can use to stay on top of your debt each month such as:
    - Making and following a budget. Budgeting helps you control your spending, focus on  spending less than you earn. It also helps you plan for long-term financial goals.
    - Check your balance often. Keeps you across any unpaid credit sitting on your account.
    - Setting up automatic payments. Ensures you pay your bill on time and have one less thing to worry about.
   Each overdue payment can impact your score, and then remain on your credit report for five years. So, it's definitely worth a little extra effort to make your payments on time.
2. Only submit a credit application when truly needed
   The next time you have an opportunity to take out credit - whether it's a new credit card or loan application, ask yourself "Do I really need this?"
   Too many applications, especially in a short period of time, drops your score due to the credit check process.
   Each application can shave a few points off your score. It's worth it to occasionally apply for credit, especially when your other good habits keep your score up. That being said, it's probably not your best bet to constantly send out applications — especially when you don't really need that personal loan, credit card or other offer.
3. Research first, then apply
   This tip works quite well with the previous one. You don't need to apply if you look into the interest rate, terms and conditions like annual fees and other key points beforehand. Do your research, first.
   Check out the fine print to make sure you're eligible before you apply for any offer. Some cards have strict limits tied to minimum income and similar rules, so you can save time and avoid knocking down your credit score. Your credit history will reflect this smart decision, benefitting you in the long run.
4. Own your credit profile
   If you are making positive credit decisions, it is important that you benefit from this.
   Our recommendation to accomplish this is, if you pay for a credit account like a credit card or utility bill make sure your name is on the bill.
   When your name is tied to a credit account, you build your credit score by making on-time payments. If all the credit accounts you help pay for, or pay for entirely, are in someone else's name, you don't get that benefit.
   If you're in a relationship or share a home with housemates, consider splitting up the accounts so everyone has an opportunity to build their credit, including you.
5. Regularly review your credit report and score
   Checking in on your credit report and score means you can catch potential problems, like signs of identity fraud, as well as errors that drive down your score. It's part of the path to excellent credit.
   An excellent credit score will showcase that you are a responsible borrower which helps lenders determine the risk of lending you cash. The higher your credit score, the more likely you are to get approved for loan applications and move closer towards your financial goals.

You can see all the nitty-gritty details in your credit report for free once every 12 months by requesting a copy from Equifax.

You can check your credit score or credit report overview at any time for free with GetCreditScore.
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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.