How to improve your credit score fast

Fixing your credit can take time. Learn more about what is considered a bad credit score, how to improve it and how to maintain a good credit score.

Being late with repayments and household bills can damage your credit score without you even realising it.

Before you apply for a loan, many lenders will check your credit score – which are used to determine a customer’s creditworthiness – to ensure your financial history is in tiptop shape.

But to ensure you’re in a position for a loan, there are some easy credit traps you may fall into before you get the green light.

Purpose Advisory financial adviser Harry Goldberg said debt can have a negative impact.

“If you take on too much debt, your credit rating will take a hit,” he said. “Make sure to pay off your debt first before applying for another loan.”

Being late in making repayments is another negative, and will show the lender you are struggling with paying money back.

“Whether it’s a phone, electricity, gas or rent bill, don’t miss out on any payments,” Mr Goldberg said.

He believes there’s no need to cut up your credit card, just learn how to use it wisely.

There are a few things you can do to keep your credit rating healthy.

“Having a credit card without ever going into arrears can support your claim that you’re worthy of lending money to,” he said.

There are a few things you can do to keep your credit rating healthy.

Marketplace lender SocietyOne’s spokeswoman Melissa Cicero suggests setting up a direct debit early in your pay cycle.

“It’s a good way to ensure you always have your payments covered,” she said.

When shopping around for credit, Ms Cicero said some lenders like SocietyOne will give you a rate estimate without impacting your credit score.

She warns if you make too many applications for credit it won’t look good to the lender. This includes payday loans.

“Lenders won’t look favourably on those who have needed small emergency funds,” Ms Cicero said.

“Think twice before taking out a payday loan and cover the expense by sacrificing somewhere else in your budget if you can.”

As you move from bad credit to fair credit, to good credit, you can start to save money and take advantage of more opportunities.

Remember to build your credit rating with credible and trusted lenders as this will help you down the track.

Originally published as How to improve your credit score fast