How to fix a bad credit score 

Credit Score

Featured Posts

Financial Health

Personal Finance

+ 2

Team MONEYME|18 July 2023| 3-minute read

A bad credit score doesn’t have to mean financial catastrophe.  

In Australia, your score is determined according to comprehensive credit reporting. While negative incidents (such as late repayments) can do damage, positive incidents (such as making repayments on time) can boost your score. 

If you’ve checked your score lately and found there’s room for improvement, we’re here to give you a helping hand with steps you can take to help turn your score around.  

(Btw, you can check for free in seconds on the MONEYME app, and it won’t impact your score!)   

Is your credit score truly that bad–or has there been a mistake? 🫤 

Credit providers and reporters can make mistakes from time to time. So, your first step is to check your credit report with a magnifying glass. You can request your credit file from any of the credit reporting bodies, Equifax, Experian and illion. 

Common mistakes include accounts that don’t belong to you, incorrect account balances, and debts listed multiple times. 

The fastest way to get mistakes corrected is by contacting your credit provider. 

Start repaying on time, every time ⏰ 

Late repayments are one of your credit score’s most dangerous enemies. 

An overdue repayment (one 14+ days late) stays on your credit report for two years, while a default (one 60+ days late and worth $150+) remains for five years.  

The good news is that timely repayments can help to balance out any harm done, by nudging your score upwards. Put repayment deadlines in your calendar, set reminders – and get strict about meeting them.  

This also applies to other bills, such as utilities and post-paid mobile plans. Set up direct debits wherever possible and set reminders to check you have enough money in your account before you get charged. If you don’t, reach out to your provider before your bill is due, they might be able to help with a payment plan or an extension. 

Hone your financial management skills 🤹🏽‍♂️ 

Are your finances more chaotic than coherent? It’s time to hone your skills.  

Attack your debts first. If you have many, consolidate them into one to avoid juggling multiple repayments. Plus, you may be able to negotiate a lower interest rate.  

At the same time, get serious about budgeting. Track your spending, figure out where to cut costs (if possible), and plan carefully. We’ve put together a list of handy budgeting apps here. 

Cut your credit utilisation ratio 💳 

Your credit util- what? Your credit utilisation ratio is the difference between how much credit you’re allowed to get and how much you’re using. Banks and lenders prefer a lower ratio because it demonstrates you’re a responsible borrower if, for example, you’re not maxing out your credit card/s. 

Reduce your ratio by either reducing your debt (paying off your card) as soon as possible or asking for a higher credit limit (if you can avoid the temptation of using the higher limit). 

What if you’ve never borrowed money before? 🤷🏿 

It might seem counterintuitive, but one way of improving your credit score is establishing a good track record by borrowing money, then repaying it on time. 

That way, you can prove you’re a reliable borrower, which could help give your score a lift. 

Before you rush into applying, though, check your credit score and eligibility requirements. You want to be confident your application will be accepted and that you’re able to comfortably pay back the loan or credit card. Rejected applications don’t do your credit score any favours. 

Time to turn things around 🌪️ 

A bad credit score doesn’t have to be that way forever. 

Commit yourself to making improvements, then check your score regularly. The more you see it grow, the more motivated you’ll be to master your finances.  

Check your score for free

Do you know your credit score? Download the MONEYME app to check your score for free today.