All good things in life take time - like watching all 19 seasons of Grey’s Anatomy, growing your temperamental house plants, and improving your credit score. 

But why is it important to improve my credit score?

Your credit score is basically like your Uber rating but for money. A good credit score is like a stamp of approval that gives banks and lenders confidence that you’ll be able to pay back a loan.

The most common reason people in Australia look to improve their credit score is to borrow money, for example to take out a mortgage.

‍Alright, give me the golden tips to beef up my credit score:

1. Pay your bills on time

We’re talking utilities bills, mortgage or rent payments, and even your buy now, pay later installments. You want the bank to see you as a responsible person who’s boss at adulting.

2. Only apply for loans you actually need

Here’s what applying for credit looks like from the banks POV:

• Applying for a credit card with a credit limit you can afford? Beige flag
• Applying for multiple lines of credit with high credit limits? Red flag.

Keep your credit score in mind when you apply for any type of loan, especially if improving your credit score is a priority for you. 

‘Coz if you’re rejected from a loan or a credit card, it can harm your credit score. And if you get rejected from multiple credit cards, it can become a slippery slope.

3. Lowering your credit card limit

An easy way to inch up your credit score is to lower your limits on your credit card.

If for example you’ve got a credit card with a $10,000 limit but you only use $3,000-$4,000 per month, consider lowering the limit to $5,000-$6,000.

This shows banks that you’re not too reliant on debt.

4. Paying off debts and closing your credit cards

If you’ve got small debts sitting around and you have the capacity to pay them off - do it!

And if you have a few credit cards, you should look at closing ones you don’t need.

5. Build your savings

Building your emergency fund savings will provide lenders reassurance that you can continue to repay bills on time even if something unexpected happens.

You might not see an instant change with these actions, but your credit score will definitely start to move upwards slowly.

But sometimes, just sometimes, your bad credit score is not your fault. 

If you notice something that looks like a mistake, or even fraud it’s important to get on top of those errors ASAP. You can contact your credit provider or the credit reporting agency to amend errors.