ADVICE
How to Improve Your Credit Score Before Applying for Finance
5 minute read
Introduction
Your credit score is one of the most consequential numbers in your financial life — yet most Australians rarely look at it until they’re about to apply for a loan. By that point, it may be too late to make the improvements that could secure a significantly better interest rate or increase your borrowing capacity.
The good news is that your credit score is not fixed. It’s a dynamic reflection of your financial behaviour, and with the right actions — applied consistently over time — it can be meaningfully improved. Whether you’re in Brisbane, the Gold Coast, or anywhere across Australia, this guide gives you the practical steps to strengthen your credit profile.
Understanding Your Credit Score in Australia
Reporting Body | Score Range | Top Rating |
|---|---|---|
Equifax | 0-1,200 | Excellent: 833-1,200 |
Experian | 0-1,000 | Excellent: 800-1,000 |
illion | 0-1,000 | Excellent: 800-1,000 |
What Factors Influence Your Credit Score?
Repayment history (highest weighting):
Whether you make repayments on time across all credit accounts — loans, credit cards, utilities and telcos.
Credit enquiry activity:
How often you apply for credit. Multiple hard enquiries in a short period can significantly reduce your score.
Credit account mix and age:
The types of credit you hold and how long your accounts have been open. Older accounts with clean histories contribute positively.
Defaults, judgments and bankruptcies:
Serious negative events that can remain on your file for five to seven years.
Credit utilisation:
How much of your available credit you’re using. High utilisation (above 30-50% of your limit) negatively impacts your score.
Where Does Your Credit Score Currently Sit?
Score Range (Equifax) | Rating | What It Means for Borrowing |
|---|---|---|
833-1,200 | Excellent | Access to the best available rates from a full range of lenders |
726-832 | Very Good | Competitive rates; most lenders will actively want your business |
622-725 | Good | Strong options available; minor adjustments may improve outcomes |
510-621 | Average | Some lenders; rates will be higher; improvement is worthwhile |
0-509 | Below Average | Specialist lenders only; active improvement strategy recommended |
10 Practical Steps to Improve Your Credit Score
1\. Pay every bill on time — without exception
Set up direct debits or calendar reminders to ensure every bill — loans, credit cards, utilities, phone plans — is paid on or before the due date.
2\. Reduce credit card balances to below 30% of your limit
If you have a \$10,000 credit card limit and a \$7,000 balance, your utilisation is 70%. Paying down to below \$3,000 can result in a noticeable improvement within a billing cycle or two.
3\. Stop applying for multiple credit products
Every formal application triggers a hard enquiry. Avoid applying for any other credit products in the months before applying for a major loan.
4\. Check your credit report for errors and dispute them
Errors are more common than most people realise. Access your free credit report from Equifax, Experian or illion and review it carefully.
5\. Don’t close old credit accounts
The age of your credit accounts contributes to your score. Keep old accounts open unless the fees outweigh the benefit.
6\. Address existing defaults proactively
Contact the creditor to discuss a repayment arrangement. A paid default is viewed more favourably than an outstanding one.
7\. Don’t cancel credit cards you’ve recently paid off
The reduction in total available credit can temporarily increase your utilisation ratio and lower your score.
8\. Register on the electoral roll
Lenders use electoral roll information for identity verification, which can support a smoother credit assessment process.
9\. Consider a small secured credit product to rebuild history
A secured credit card used for minor purchases and paid in full each month can rebuild a track record of responsible repayment.
10\. Monitor your score regularly using soft enquiries
Free credit score monitoring through Equifax, Experian, illion and some banking apps allows you to track progress and detect errors early — with no impact on your score.
How Long Does Credit Score Improvement Take?
1-3 months: Early improvements from consistent on-time payments and reduced utilisation
3-6 months: More noticeable movement if you’ve addressed high utilisation and stopped unnecessary applications
6-12 months: Meaningful improvement achievable for most borrowers maintaining positive behaviour
2+ years: Significant recovery from defaults or serious credit events — but improvement begins from month one
Local Tip: Brisbane and Gold Coast Borrowers
Many Brisbane and Gold Coast borrowers come to New Way Finance after being surprised by a credit assessment result. The most common issues we see are: unaware defaults from past utility or telco providers, excessive hard enquiries from previous direct applications, and high credit card utilisation from lifestyle costs. Our pre-assessment process can identify these issues before you formally apply.
Frequently Asked Questions
Q: Does checking my own credit score lower it?
No. Accessing your own credit report or score is a soft enquiry with no impact on your score.
Q: How do I get a free copy of my credit report?
You’re entitled to one free credit report per year from each of Equifax, Experian and illion. Free score monitoring is also available through various comparison websites and banking apps.
Q: Can I remove accurate negative information from my credit file?
No. Accurate negative information cannot be removed before the retention period expires — five years for most listings, seven for serious infringements.
Q: Will paying off a default remove it from my credit file?
No — but a default listed as ‘paid’ or ‘settled’ is viewed more favourably by most lenders than an outstanding default.
ABOUT THE AUTHOR
Olivia Hart
