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4 valuable lessons to help improve your credit

One of the most important things a lender will look at when you apply for a loan is your credit history. Your credit history could mean the difference between getting a home loan or not. If you are struggling with a poor credit history and are worried about approaching a lender for a loan, don’t worry, we’ve got 4 valuable lessons to help improve your credit history in no time.

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#1 Stop using your credit card

Our first lesson is a big one. In order to quickly improve your credit history, you must stop using your credit card to make purchases. This will only make matters worse for you in the long run, as it will raise your credit balance and ultimately disrupt your credit score.

If you can, choose to make purchases using cash only. Better yet, if you are able to, try to avoid unnecessary purchases altogether and instead put that money towards paying off your credit card.

#2 Pay each bill on time

hands-with-phone-and-receipts

This may come as a given for many, but it is still worth mentioning. If you make the effort to consistently pay your bills on time, lenders will take this into consideration. It shows that you are actively trying to improve your credit score. To stay on top of things, try writing due dates down on a calendar, or set reminders for yourself regarding when certain bills might be coming. If possible, even set automatic payments for any bills.

Also, if you currently have any outstanding bills, it’s best to take care of those first. This will put forth a positive contribution to your credit data and will help improve your credit score.

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#3 Do not close or open any accounts

When trying to improve your credit score, it is important that you do not close any accounts. In fact, they actually may be able to help you. Lenders will want to see that you currently have at least three open sources of credit. The longer you’ve had an account open with no issues, the better, as it’ll also improve your credit age and therefore help with reducing your credit score.

During this time, it’s also best to not open any new accounts either. Do your best to not shop around for opportunities to open new accounts. This means putting off purchasing a new car, applying for a new credit card or approaching a lender for a home loan. This can all be done at a later time when you are in a better financial position.

#4 Be patient

couple-meeting-financial-planner Last, but not least, one of the most important lessons you’ll learn when it comes to repairing your credit history is to be patient and persistent. It’s important to keep in mind that the damage done to your credit file did not appear overnight and, therefore, it will not be repaired overnight.

By actively making the effort to improve your credit score, you are taking control of your financial situation, meaning that the tough times won’t last forever. Keep trying to the best of your ability and you’ll have a clean credit file in no time.

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Tags: credit, saving, bad credit, credit report, debt consolidation

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Important legal stuff

COMPARISON RATE WARNING: This comparison rate is true only for the example given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. The comparison rates are based on a loan amount of $150,000 over a loan term of 25 years.
Lendi is the trading name of Lendi Pty Ltd, a related body corporate of your licensed credit assistance provider, Auscred Services Pty Ltd (ACN 164 638 171, Australian Credit Licence Number 442372). We will never sell your email address to any third party or send you nasty spam, promise.
EXAMPLE: This example is current as at 20th October 2016. A Click Loans Online Principal and Interest Loan of $150,000 over 25 years has monthly repayments of $767. This is calculated based on the interest rate of 3.69%, comparison rate of 3.69%, upfront fees of $0 and annual fees of $0.
IMPORTANT INFORMATION: Loan terms of between 1 Year and 40 Years are available subject to lender and credit criteria. Maximum comparison rate will not exceed 14.99% (see comparison rate warning above). Any calculations or estimated savings do not constitute an offer of credit or a credit quote and are only an estimate of what you may be able to achieve based on the accuracy of the information provided. It doesn't take into account any product features or any applicable fees. Our lending criteria and the basis upon which we assess what you can afford may change at any time without notice. Savings shown are based on user inputted data and a loan term of 30 years. All applications for credit are subject to lender credit approval criteria.
Lendi is a privately owned and operated Aussie business. Our mission is to provide Aussies with the right experience when choosing a home loan from our panel of major and non-bank lenders including Click Loans which is a wholly owned subsidiary of Auscred Pty Ltd and a related body corporate of Auscred Services, your credit assistance provider. Although Lendi compares over 1600 products from over 30 lenders, we don't cover the whole market or compare all features and there may be other features or options available to you. While Lendi is 40% owned by founders and employees, we have also been supported by some great minority shareholders including Bailador, Macquarie Bank Ltd and a number of Australian sophisticated investors. We have an independent and founder led board.
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