Your credit score shapes how lenders see you. It can determine whether you’re approved for a mortgage, car loan, or rental property. When your score drops, it’s often due to small but recurring mistakes. The good news is that most can be corrected with steady effort and the right plan.
Key Takeaways
- Payments overdue by more than 14 days appear on your report and stay for two years.
- Defaults of $150 or more remain visible for five years, even after payment.
- Making several credit applications in a short time lowers your score.
- You can request a free credit report every three months to check and dispute errors.
- Hardship arrangements don’t harm your score, contact your lender if you’re struggling.
- From June 2025, Buy Now Pay Later services will count as credit products.
Why Your Credit Score Matters
Your credit score tells lenders how reliable you are with repayments. A higher score can mean easier approvals, better interest rates, and higher credit limits. A lower score often leads to higher costs or declined applications.
In Australia, three main agencies like Equifax, Experian, and illion. Calculate scores based on similar factors: payment history, total debt, credit limits, and how often you apply for new credit.
Mistake 1: Paying Bills Late
Even one late payment can harm your score. In Australia, payments made more than 14 days after the due date are marked as missed and stay on your file for two years. Multiple late payments signal risk to lenders.
How to Fix It:
- Set up automatic payments for all accounts.
- Review balances weekly to prevent overdrafts.
- Contact your lender before the due date if payment will be delayed.
- Pay more than the minimum on credit cards whenever possible.
If you already have missed payments, start paying consistently now. Over time, positive patterns help rebuild trust.
Mistake 2: Letting Debts Reach Default
A default occurs when you owe $150 or more and haven’t paid for at least 60 days. Defaults stay on your file for five years, even if paid later.
How to Fix It:
- Set reminders for missed payments before the 60-day mark.
- Contact creditors early to arrange payment plans.
- If you already have a default, pay it off so it shows as “paid.”
- If inaccurate, dispute it with your creditor or the Australian Financial Complaints Authority (AFCA).
Mistake 3: Applying for Too Much Credit at Once
Each application adds an inquiry to your credit file. Too many in a short time lowers your score because it signals financial strain.
How to Fix It:
- Space out applications by three to six months.
- Check eligibility before applying to avoid rejections.
- Avoid unnecessary in-store credit offers.
- When comparing home or car loans, submit applications within 14 days so they count as one inquiry.
- Ask lenders if they offer soft checks that don’t affect your score.
Mistake 4: Carrying High Credit Card Balances
Credit utilisation refers to how much of your available credit you use. Using too much signals risk to lenders.
How to Fix It:
- Keep balances below 30% of your total limit.
- Make extra payments during the month.
- Request a higher limit only if you manage credit responsibly.
- Reduce your limit if you struggle with spending control.
Mistake 5: Ignoring Errors on Your Credit Report
Credit reports can contain mistakes that unfairly reduce your score, such as incorrect late payments or duplicate accounts.
How to Fix It:
- Request a free credit report every three months from Equifax, Experian, and illion.
- Check that all details and payment statuses are accurate.
- Dispute any errors directly with the credit provider.
- If unresolved, escalate to the credit agency or AFCA.
- Keep written records of all communication.
Mistake 6: Misusing Buy Now Pay Later (BNPL) Services
BNPL platforms are now treated as credit. From June 2025, missed BNPL payments will affect your credit score.
How to Fix It:
- Treat BNPL accounts like traditional credit cards.
- Limit the number of BNPL accounts you use.
- Pay every instalment on time.
- Close accounts you no longer use.
- Check that BNPL entries on your credit file are accurate.
Mistake 7: Closing Old Credit Accounts
Older accounts show credit stability. Closing them shortens your credit history and can increase your utilisation ratio.
How to Fix It:
- Keep your oldest account active with small, regular use.
- Weigh annual fees against the benefit of maintaining history.
- If closing, ask the lender to mark it “closed by consumer.”
Mistake 8: Avoiding Hardship Provisions
Ignoring financial hardship can worsen your credit. Australian lenders are required to offer support when you’re struggling.
Hardship options may include reduced payments, pauses, or extensions. These arrangements don’t harm your credit score.
How to Fix It:
- Contact your lender as soon as difficulties arise.
- Be transparent about your situation.
- Ask for hardship options and confirm them in writing.
- If denied, call the National Debt Helpline at 1800 007 007.
Mistake 9: Forgetting to Update Contact Details
Many missed payments happen because reminders never reach you. Keeping contact information updated prevents this.
How to Fix It:
- Update address, email, and phone details with all providers.
- Create online accounts for digital notifications.
- Check your report after moving to confirm your data is current.
- Enable payment reminders via SMS or email.
Mistake 10: Not Building a Positive Credit History
Avoiding credit completely leaves you without proof of reliability. Lenders prefer seeing a history of responsible use.
How to Fix It:
- Start with a low-limit credit card and repay it monthly.
- Pay rent and utility bills on time.
- Take small, planned loans and repay them early.
- Keep consistent positive activity on record.
Your Step-by-Step Credit Recovery Plan
Week 1:
- Request credit reports from all three bureaus.
- Review for errors and set up automatic payments.
Week 2:
- Dispute any mistakes and explore hardship options if needed.
- Reduce balances to stay under 30% utilisation.
Week 3:
- Pay down high-interest debts.
- Update contact details.
- Close unused BNPL accounts.
Month 2–3:
- Continue paying on time.
- Check your report to confirm corrections.
- Avoid new credit applications.
Month 6:
- Review your updated score.
- Keep consistent, positive financial habits.
When to Seek Professional Help
If you have multiple defaults or collection accounts, professional guidance can help you rebuild. Choose services that are transparent about fees and focus on legitimate dispute resolution.
At Easy Credit Repair, we help Australians understand and improve their credit. Our team reviews your report, identifies errors, and works directly with creditors to create a realistic plan. Everyone deserves a fair path to financial stability, and we’re here to help make that process clearer and less stressful.
Final Thoughts
Your credit score is not permanent. With patience, consistency, and responsible habits, it can improve. Pay on time, limit credit use, and check your report regularly. These small actions build a foundation for long-term financial confidence.
If you’d like guidance on your journey toward better credit health, click here for free consultation.
Disclaimer: All information is based on research and our views only. Credit reporting rules may change. For personal advice, contact us directly.
