What is your credit score?
In Australia, your credit score indicates your financial reliability and generally ranges from 0 to 1,200. Credit reporting agencies calculate this score based on your credit history, looking at factors like your on-time payment record, how much of your available credit you’re using (credit utilisation), how often you apply for new credit (credit inquiries), and the age of your credit accounts.
Australian credit scores are typically categorised as:
Excellent: 800–1,200
Very Good: 700–799
Good: 625–699
Average: 550–624
Poor: 0–549
Lenders, insurers, and landlords use this score to assess your trustworthiness. A higher score generally improves your chances of getting approved for loans and securing better interest rates.
1. Requesting a Credit Increase
Requesting a credit limit increase can be a useful financial move, offering greater flexibility and helping you access funds more quickly. Whether you need it for a large purchase or to improve your credit utilisation ratio, a higher limit can be beneficial.
However, lenders may conduct a hard enquiry, which could temporarily lower your credit score. While the impact is usually minor, multiple hard enquiries in a short period may raise concerns with future lenders.
Additionally, having more available credit can be tempting, potentially leading to overspending and increased debt. Before making a request, consider whether you truly need the increase and if you can manage it responsibly.
If your credit score is strong, your income has improved, and you have a solid repayment history, your chances of approval are higher. Weighing the benefits against the risks will help ensure it’s the right decision for your financial health.
2. Switching Mobile Plans
If you can get extra data for a lower price, it’s an easy decision to switch. However, changing phone plans often means your mobile provider will conduct a credit check, which could temporarily impact your credit score. While this is usually a minor issue, multiple checks in a short period may affect your ability to secure credit elsewhere.
Before switching, consider whether the savings outweigh the potential impact on your credit file. If you have a strong credit history and manage payments well, the effect should be minimal. However, if you’re planning to apply for a loan or mortgage soon, it may be worth holding off to avoid unnecessary enquiries on your report.
3. Not Paying Parking Fines
Unpaid fines are reported and can negatively impact your credit score. If you have an outstanding parking fine, it’s important to pay it off as soon as possible to prevent it from affecting your financial record.
Ignoring fines can lead to further penalties and even debt collection, which could harm your credit score in the long run. To build and maintain good credit, stay on top of any outstanding payments and address fines promptly before they escalate.
4. Changing Utilities Provider
Your utility provider runs a credit check when you’re signing up, so you better make sure that the new deal is worth it. That being said, a utility provider check operates slightly different to a standard credit check.
If you shop around multiple utilities providers, the credit checks will be generally counted as one hard enquiry for a period of time (generally between 14 and 45 days).
