What is a credit score?

Your credit score is a numerical representation of your creditworthiness, used by lenders to assess the risk of lending you money. In Australia, credit scores range from 0 to 1,200, with a higher score indicating better creditworthiness. This score is influenced by various factors, including your borrowing history, repayment behaviour, and the types of credit you've used.

If your credit score is low, below are steps to improve it:

Steps to Improve Your Credit Score

1. Check Your Credit Report Regularly
   • Reviewing your report helps you identify any inaccuracies or fraudulent activities that could negatively impact your score.
2. Pay Bills on Time
   • Consistently paying your bills on time is crucial. Late payments can significantly harm your credit score. Setting up automatic payments or reminders can help ensure you don’t miss due dates.
3. Reduce Outstanding Debt
   • High levels of debt relative to your income can lower your credit score. Aim to pay down existing debts and avoid taking on new debt unless absolutely necessary.
4. Limit Credit Applications
   • Each time you apply for credit, it leaves a mark on your credit report. Frequent applications can suggest financial distress and lower your credit score. Only apply for credit when you really need it.

Improving your credit score is a proactive step towards better financial health, providing you with more favourable borrowing options and lower interest rates. A high credit score can also open doors to significant opportunities.