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Simple Ways to Keep Your Credit Score in Check

Updated: Mar 27



Financial institutions use your credit score to determine whether or not you are a credit risk, as well as the terms of any borrowed money. With a high credit score you will generally qualify for more favourable interest rates on credit cards, loans, and other forms of credit. However, a bad credit score can make it difficult to qualify for a new loan or even to refinance your existing one.

Luckily, you can improve your credit score with a few simple changes to your spending habits.


Deal with debt

It may take some time, but paying off debts will definitely help your credit score. There are a number of different options available including getting a credit card that specializes in paying off debt, or balance transfer and debt consolidation.

If you are paying several debts at once, prioritising repayments of “bad debt” (eg. high interest rate credit cards and payday loans) over good debt (eg. secured loan) can have a positive impact on your score. Try to maintain a low balance on revolving debt such as credit cards, personal loans, and department store cards.


Check your credit

We recommend checking your credit report at least once a year to ensure it is up to date and correct. You can access it for free at Equifax, Experiean and Illion, and it will help you identify what accounts are open, where late payments have occurred, and other detrimental factors impacting your score. Credit reporting agencies can make mistakes, so it is wise to check your credit report regardless of your current financial situation.


Consider a personal loan

Another way that you can improve your credit score is to consolidate all of your debt into one lower interest rate loan. By using a personal loan to consolidate and pay off bad debt, you will only have one single monthly payment, which will likely be less than the total payments that you were making before consolidating. Not only will this make servicing the loan much easier; it will improve your credit rating.


Pay your bills on time

This is the single most important way to fix your credit score: make sure that you pay your bills on time.

Late mobile phone and utility bill repayments are not only recorded in your credit report; they will often have a direct impact on your ability to meet other financial obligations. Lenders look at late payments as a sign that you may be unable to handle financial responsibility, so it can be helpful to set up regular bank transfers or some other automatic payment method.

If you are paying your bills on time, but you still rely heavily on credit cards, it may be time to contact your creditors. You may consider requesting that your interest rates be lowered and that your credit limit be increased. By doing this, you will immediately increase your available credit, which will improve your score in the process.


Build good credit

As you are working on improving your credit score, it’s best not to unnecessarily open additional accounts or close existing ones. In fact, the only way to improve your credit score is to demonstrate that you are a reliable debtor, so some level of debt is necessary. For example, if you have a credit card with a low balance and are making payments consistently, lenders will view you as a low-risk customer. For those who have a history of missed payments, it is usually more effective to start managing the account sensibly rather than paying it off and closing it.

There are many more ways that you can improve your score. To find out which areas may be causing problems, contact a credit counselling service or a financial planner for more information.

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