How to Improve Your Credit Score in Australia (2025-26)

Roughly 14% of adult Australians carry a below-average credit score. That is more than two million people who will pay higher interest rates, face tighter loan conditions, or be declined outright when they apply for a mortgage or business finance.

The good news is that credit scores are not fixed. Equifax data from December 2025 shows 52% of Australians improved their scores over the year, despite rising costs of living. The actions that move a score are not complicated. They do require consistency.

This guide explains how the Australian credit scoring system works, gives you the correct score ranges for all three bureaus, covers the major June 2025 changes to Buy Now Pay Later regulation, and lays out 10 practical steps you can take right now. If you are planning a home purchase, property investment, or any significant borrowing in the next year or two, your credit score is the number worth focusing on first.

How Credit Scores Work in Australia

The Three Credit Reporting Bureaus

(formerly Dun & Bradstreet). Each maintains a separate file on you, and each calculates its own score using a slightly different model. Not every lender reports to all three bureaus, so your three scores can look quite different. A default from a telco may appear on your illion file but not on Equifax. A bank default may be on Equifax but not on Experian.

You are entitled to a free copy of your credit report from each bureau once every three months. The MoneySmart guide on credit scores and credit reports is the most reliable starting point for understanding your rights under Australian privacy law.

Credit Score Ranges in Australia

The three bureaus use different numerical scales. Here is how the bands compare:

What Goes Into Your Score?

All three bureaus assess broadly the same factors, weighted differently in each model:

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  Repayment history: the single biggest factor since Comprehensive Credit Reporting (CCR) was introduced in 2018. On-time payments now actively build your score, not just protect it.
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  Credit enquiries: every application for credit, including BNPL accounts from June 2025, creates a hard enquiry that stays on your file for 5 years.
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  Defaults and court judgements: stay on your file for 5 years from the date listed, regardless of whether the debt is paid.
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  Credit utilisation: how much of your available credit limit you are using. Under 30% is generally considered healthy.
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  Age of credit history: longer credit histories with positive records improve your score over time.
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  Credit mix: a variety of credit types (home loan, credit card, car loan) handled responsibly can strengthen your profile.

10 Ways to Improve Your Credit Score in Australia

1. Pull Your Credit Reports from All Three Bureaus

Start here, every time. Request your free credit report from Equifax, Experian, and Illion separately. Each bureau has a different file on you, and a problem on one may not appear on the others. You are entitled to one free report from each bureau every 3 months under the Privacy Act 1988.

Before any major loan application, check all three. Lenders access different bureaus, and you do not want to be surprised by a listing on the bureau your lender happens to check.

2. Dispute Errors Immediately

Errors on credit files are more common than most people realise. A duplicated debt, a default listed against someone with a similar name, an account balance that was paid off but still shows as outstanding, these mistakes drag your score down, and you are not responsible for them.

Check every listing: your name, date of birth, residential address, each credit account and its balance, and every default or enquiry. If anything looks wrong, contact the credit reporting bureau directly to lodge a dispute. Under the Privacy Act, the bureau must investigate and correct errors. A successfully removed error can move your score by more than you expect.

3. Pay Every Bill on Time, Every Month

Since CCR became mandatory for major Australian lenders in 2018, your repayment history is now the dominant factor in your credit score. Paying on time not only protects your score; it also actively improves it. Every on-time payment adds a positive data point to your file with participating lenders.

Set up direct debits for regular expenses: rent, utilities, phone, and any loans. If you genuinely cannot make a payment, contact the provider before the due date. Hardship arrangements that are in place before a default is listed do not affect your credit score the same way as an actual default.

4. Reduce Your Credit Card Utilisation

Credit utilisation is the ratio of your outstanding balance to your total credit limit. If you have a $10,000 credit card limit and regularly carry a $8,000 balance, you are at 80% utilisation. That is high. Lenders want to see utilisation below 30%, and ideally below 20% for the best scores.

Two practical moves: pay down your balance faster, or ask your lender to increase your credit limit while keeping spending the same. Both reduce your utilisation ratio. The second option works best if you have a strong repayment history and good standing with the lender.

5. Space Out Credit Applications

Every credit application, whether for a home loan, credit card, car finance, or a personal loan, creates a hard inquiry on your file that stays there for 5 years and temporarily lowers your score. Multiple applications in a short period signal financial stress to lenders, even if each application is individually reasonable.

If you are rate-shopping for a home loan, try to do all your applications within a 14-day window. Some credit scoring models treat multiple home loan enquiries within a short period as a single enquiry. Outside of genuine rate comparisons, wait at least three to six months between applications if you do not urgently need new credit.

Treat Buy Now Pay Later Like a Credit Card (New Rules: June 2025)

What this means in practice:

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  Applying for a BNPL account now creates a credit enquiry on your file
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  Missed BNPL payments can be reported to credit bureaus
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  Multiple BNPL applications in a short period count as multiple hard enquiries
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  If your BNPL provider participates in CCR and you pay on time, consistent payments can build a positive history

The Equifax data is instructive: the average credit score of Australians applying for BNPL platforms fell from 694 in 2021 to 582 in 2023, as many users treated BNPL as consequence-free spending. That is no longer the case. Treat every BNPL account exactly as you would a credit card. Only open accounts you need, pay on time, and set up automated repayments where possible.

7. Deal With Defaults Before They Are Listed

A default listed on your credit file stays there for 5 years from the date it was listed, not from the date the debt occurred or the date you pay it off. Paying a default changes its status to ‘paid default’, which is somewhat better in lenders’ eyes, but the listing itself remains for the full five years.

The best strategy is to engage with the creditor before the default is listed. Under Australian credit reporting law, a creditor must send you a written notice before listing a default. If you receive one, respond immediately. Negotiate a payment arrangement, request a financial hardship arrangement, or dispute the debt if you believe it is incorrect.

Do not let the amount seem too small to bother with. A $150 unpaid phone bill can sit as a default on your file for five years and cost you tens of thousands of dollars in higher mortgage interest over the life of a loan.

8. Keep Older Accounts Open

The age of your credit history is a factor in your score. An account you have held for ten years with no missed payments is a strong positive signal. Closing it to simplify your finances removes that history from your active profile.

If you have paid off a credit card you no longer use regularly, consider keeping it open with a low or zero balance rather than closing it. Make one small purchase every few months to keep it active. This maintains the age of the account and demonstrates responsible credit management without accumulating new debt.

9. Separate Your Applications From Your Comparisons

Checking your own credit score is a soft enquiry and has zero impact on your score. Use this. Check your score through each bureau’s own platform or through comparison services like CreditSmart before you start shopping for credit. Know where you stand before any lender sees your file.

The CreditSmart guide on improving your credit score from the Australian Retail Credit Association is useful reading for understanding how lenders interpret your report. Once you know your score, you can target loan products you are more likely to be approved for, reducing the number of hard enquiries needed.

10. Build a Positive Credit History If You Have None

Having no credit history can be as problematic as having a poor one. Lenders have no data to assess you against. If you are starting from scratch, consider a low-limit credit card that you use for minor purchases and pay off in full each month. Some lenders also report buy-to-own and other instalment products to the bureaus under CCR.

Consistency is more important than the type of credit. A single credit card used responsibly for 24 months builds a more useful credit history than three products opened and closed over the same period.

How Long Does It Take to Improve a Credit Score?

There is no universal timeline. The starting point and the type of negative listing determine how fast you see movement.

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  Error removals: can improve your score within 30-60 days once a bureau investigation is complete.
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  Bringing repayments current: positive changes typically show within one to three months once consistent on-time payments are recorded.
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  Reducing utilisation: paying down a credit card balance is usually reflected in your score at the next update cycle, which is typically monthly.
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  Recovering from defaults: defaults stay for 5 years. Your score can still recover meaningfully during that period as positive data accumulates, but the default listing remains visible to lenders.
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  Building from zero: most people see a meaningful Equifax score after 12-24 months of consistent credit use and on-time payments.

Australians under 25 typically score between 550 and 580 due to limited credit history. Australians over 55 average 720 to 760. Age and consistency compound over time.

How The Kalculators Can Help

Your credit score does not exist in isolation. It connects directly to your ability to secure mortgage finance, structure property investment, access business lending, and plan for long-term wealth. The tax and financial advice you receive now affects your capacity to borrow later.

At The Kalculators, our registered tax agents and financial advisers work with Adelaide residents and small business owners on the full picture: not just the tax return you lodge this year, but the financial position you are building over the next five years. If you want to understand how your current tax position, debt structure, or business finances are affecting your borrowing capacity, that is a conversation worth having now.

Call (08) 7480 2593, Monday to Friday, 9:00 AM to 6:00 PM, or visit our offices at 182 Salisbury Highway, Salisbury; 315 Prospect Road, Blair Athol; or 280 Main South Road, Morphett Vale. We also serve Murray Bridge, Woodville, Melrose Park, Port Augusta, Prospect, and Brighton online via info@thekalculators.com.au.