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6 ways to improve your credit score quickly

If you have a low credit score you may be struggling to get approved for a home loan or even a credit card. There are a few things you can do to help improve your credit rating in a short amount of time to give you the best chance of getting approved and securing the lowest interest rate possible.

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Tips to raise your credit rating

1. Check your credit report regularly

This will help you monitor your credit rating, and flag anything you believe has been incorrectly recorded. Most credit agencies will provide you with a free credit report each year.

Pay close attention to:

  • the spelling of your name

  • current and former addresses

  • current and former employers

  • past credit applications or queries

  • any missed credit payments

2. Correct any inaccuracies

If you spot an error on your credit report, speak to the relevant credit reporting agency as soon as you can to get this error corrected. Challenge any issues that you come across when checking your credit report, and always be aware of the possibility of identity theft corrupting your statements and score.

You can request a correction on your credit file with Equifax here.

3. Pay your bills on time

It sounds obvious, yet many Australians still struggle or simply forget to pay their bills. Review your payment history and existing credit accounts. Try to set up automatic or direct debit payments from your account so you won't have to worry about forgetting.

If you can, try to pay your bills early, which can demonstrate your reliability and responsibility to lenders over time. Keep in mind that if you do have a bad habit of overdue bills, this record can stay on your credit report for up to 5 years.

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4. Avoid making too many credit enquiries

Frequently making hard enquiries, that is, applying for credit is an adverse signal to lenders as it may suggest that you are in a position of financial difficulty. This, in turn, will be noted in your credit history and can subsequently lower your credit score.

Therefore, it's a good idea to avoid making too many applications in a short period of time. Instead, space out your applications and only apply when there is a high chance you'll be approved. Speaking to a Home Loan Specialist before you apply. They can help find a loan option you are likely to get approved for.

5. Consolidate debt

This is the process of combining all your high interest debt obligations into one loan, which generally has a much lower interest rate in comparison e.g. incorporating your credit card or personal loan into your home loan.

This can offer a significant saving in interest and means you won't need to juggle multiple repayments each month. Consolidating may give you a better chance of improving your credit score in the future.

6. Try not to switch jobs

For lenders, job stability = financial stability, and showing that you can keep a steady job speaks volumes. If you can, try to avoid job hopping and having gaps in your resume while you are attempting to mend your credit rating. The more consistent your income is, the better, when it comes to raising your credit score.

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With this information, as well as with some hard work and patience, you can now attempt to raise your credit score in just a few months.

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What is a credit score?

A credit score is a figure that determines your financial history. This number tells lenders how reliable you are and consequently, whether or not you're eligible for a home loan or credit card. A bad credit score could mean that you might face difficulties in securing a loan in the future, or be required to pay higher interest rates and monthly loan repayments despite securing one.

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Why is my credit score so important?

Without a good credit score, the process of getting a home loan can be prolonged. While it's possible to start out with a bad credit score and gradually improve it, a good credit score from the get-go can really allow lenders to see you as a consistent individual when it comes to your finances.

This is why it's important to be aware and conscious of it early, as when the time comes to apply for a home loan, it may be too late. You might then, have to delay the process of obtaining a home loan.

How is my credit score calculated?

Your credit score is calculated using the information on your credit report, which can include the following:

  • Personal details: This could include age, employment history, address and more.

  • Type of credit provider: This is relevant as there are varying levels of risk with different lenders.

  • Size of borrowed credit: How much you've borrowed and what kind of loan you're taking out affects your credit score e.g. there is a higher level of risk associated with home loans than a credit card.

  • The number of credit enquiries: A record exists of all past applications and you might be viewed as a higher risk individual if you've made many enquiries in a short span of time.

  • Existence of overdue debt: This will negatively impact your credit score.

  • Debt agreements: Default judgements, debt agreements and court writs are likely to lower your credit score.

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Got a home loan question?

We're here to give you answers. Choose a time that to chat with a Home Loan Specialist and we'll connect you to an expert.

The information in this post is general in nature and should not be considered personal or financial advice. You should always seek professional advice or assistance before making any financial decisions.

Tags: credit report, credit score

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Important legal stuff

Lendi is the trading name of Lendi Pty Ltd (ACN 611 161 856), a related body corporate of Auscred Services Pty Ltd (ACN 164 638 171, Australian Credit Licence 442372). We will never sell your email address to any third party or send you nasty spam, promise.
# Quoted rate applies only to PAYG loans with LVR of 80% or less with security in non-remote areas. All applications are subject to assessment and lender approval.
Lendi is a privately owned and operated Australian business. Our mission is to change the way Australians get home loans by providing a faster, smarter and more secure home loan experience designed around the customer’s convenience and needs. Although Lendi compares over 1600 products (2,500+ products including feature and pricing variations) from more than 35 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 35% 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. Lendi's board is majority independent and non-executive.
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. Fees and charges apply. All applications are subject to assessment and lender approval. Quoted rate applies only to PAYG loans with LVR of 80% or less with security in non-remote areas. All applications are subject to assessment and lender approval.
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.
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