Improving your credit record
How to improve your credit score
Your credit score is based on the information in your credit report, so by checking your credit report, making sure you pay bills on time and managing credit cards responsibly, you’ll start to see your credit score improve.
Steps to improve your credit score
- Check Your Credit Report – Credit score improvement begins with your credit report. If you haven't already, request a free copy of your credit report and check it for errors. Your credit report contains the data used to calculate your credit rating and - while credit providers and credit reporting bodies must take steps to get things right - there's still a chance that it may contain errors. In particular, check to make sure that there are no late payments incorrectly listed for any of your accounts and that the credit limits for each of your open accounts is correct. If you find errors on any of your reports, dispute them with the credit reporting agencies or credit providers.
Credit reporting agencies
- Pay your bills on time – Defaults and late payments can have a negative impact on your score.
- If you have missed payments, get current and stay current. The longer you pay your bills on time after being late, the more your score should increase. Older credit problems count for less, so poor credit performance won't haunt you forever. The impact of past credit problems on your score fades as time passes and as recent good payment patterns show up on your credit report, credit providers will see that you are managing your credit well.
- Paying off a default will not remove it. It will stay on your credit report for five years.
- Contact your credit provider or a legitimate financial counsellor. If you are having trouble making ends meet, they can help. This won't rebuild your credit score immediately, but if you can begin to manage your credit and pay on time, your score should increase over time. Seeking assistance from a financial counselling service will not hurt your score.
- Don't open a lot of new accounts too rapidly. New accounts will lower your average account age, which will have a larger effect on your scores if you don't have a lot of other credit information. Also, rapid account buildup or rapid increases in your credit limits can look risky if you are a new credit user.
- Have credit cards – but manage them responsibly. In general, having credit cards and installment loans (and paying timely payments) will rebuild your credit score. Someone with no credit cards, for example, tends to be higher risk than someone who has managed credit cards responsibly.
- Closing an account doesn't make it go away. A closed account will still show up on your credit report, and may be considered in the calculation of a score.
To summarise, "fixing" a credit score is not just about fixing errors in your credit report.
Raising your score after a poor mark on your report or building credit for the first time will take patience and discipline. Be wary of credit repair companies who promise to instantly “fix your credit history” by having black marks removed from your report. If information on a credit report – that is used to calculate your credit score – is correct, it can’t be removed.