From university entrance to the premiership match, there are a few critical tests in every person’s life where the final score can feel like a make or break moment. But there’s one important ‘game’ that many Aussies aren’t even aware they’re playing. And unlike the final tally when you’re out golfing, you want your score to be as high as possible. That’s right – we’re talking about your credit score.

What is a credit score?

Your credit score is a number that represents your creditworthiness. It’s something that banks and other lenders use to determine your eligibility, how much you can borrow, and at what interest rate.

How do you access your credit score?

If you don’t know what your score is, or you’ve never seen your credit file, you can look it up now for free. Under Australian law, you are entitled to check your credit report for free once every 12 months. It’s a good idea to check it on a regular basis to ensure that the information on your record is correct and that you are aware of any issues affecting your ability to get credit which may include identity theft, where other people use your personal information for financial gain.

What counts towards your credit score?

Credit agencies take lots of things in to account when they’re calculating your credit score. Your credit file is a record of all the arrangements you have had with different suppliers or lenders where you’ve been given credit in some form or another. For example, your file could include your utility providers, phone/internet contracts, personal loans, and more. Your file will also generally list applications you’ve made.

If you’ve ever been seriously late with repayments or defaulted on a loan, that will be there too. The good news is that these black marks don’t affect your credit score forever. Repayment history info sticks around for two years, defaults for five years, and overdue accounts listed as ‘serious credit infringements’ last seven years.i

Is it possible to improve a credit score?

If you’re worried about future plans to borrow money for something important, like buying a home or starting a business, there’s some good news. It’s possible to improve your credit score.

The first thing you should be aware of is that some companies out there claim to offer ‘credit repair’ services, where they’ll ‘fix’ your credit score. Keep in mind, the only way your score can be changed immediately is if you’re able to prove that something negative on your file is incorrect, so be wary of any service promising miracles.

Aside from that, there are a few things you can do to improve your credit score (or keep your current high score). If you are new to the world of credit it’s important to develop a credit history so that lenders have some assurance that you are a responsible borrower. You could start by opening a mobile phone or internet account, registered to your name and address.

Be aware that applications for credit are not viewed favourably and do take points off so only apply for credit when you are confident of getting approval.

The most obvious way to improve your credit rating is to pay bills on time. If you’re always forgetting due dates, consider setting up direct debit arrangements. Be aware that any payment defaults show up so it’s worth being proactive in negotiating a payment plan if you are experiencing financial hardship.

Finally, ensure that incorrect details or fraudulent activity in your name is not bringing your score down. Jump online and check out your score now; it could save you a lot of financial heartache in the future.