How to get a good credit score

What is a good credit score?

Your credit score, also known as your credit rating, is a number that represents your creditworthiness. This shows the credit card or loan provider what your history of credit use is and if you’re able to manage your debt(s) effectively. 

A credit score is calculated and reported by various credit reporting bodies like Equifax, opens in new window, illion, opens in new window, or Experian Australia, opens in new window. 

So, what are the ratings of credit scores and what is considered good? Different reporting bodies have varied ranges, so it’s best to look on their website to get a better understanding.

How is your credit score calculated?

Your credit score is calculated based on the information within your credit report. The report looks for patterns in your credit history and considers the amount of money you’ve borrowed, length of credit, amount owing, the number of credit applications made, and if repayments were made on time. The report will also look at your history of bankruptcy. Based on that information, it calculates the risk of providing you with a new line of credit or loan. 

Best ways to improve credit score

Here are our top tips for improving your credit score and creditworthiness. Learn more about creditworthiness and why it matters.

Check your credit score on your credit report to see where you stand

You can get a copy of your credit report and check your credit score using one of the many credit reporting bodies. You’re entitled to a free copy every 12 months, so it’s a good idea to get your credit report yearly to make sure it’s correct. 

Sometimes people notice errors in their credit report. This may be due to a mistake by credit providers or the credit reporting agency or could indicate identity theft. If there’s a mistake on your report, the government’s MoneySmart, opens in new window website offers help on reporting errors.

Pay bills and rent on time

It’s important to pay bills like your phone, electricity and rent on time. This could be before or when they’re due. Missing due dates can happen to anyone, but if it becomes a habit, it can impact your credit score.

Missed payments may lead to referral to a debt collector or to a default being recorded on your credit report.

If you’re worried about forgetting or missing a due date, most service providers can set up a direct debit to pay your bill or a set amount on time. Other ways to keep on top of your bills include using BPAY®, creating regular payments, setting up buy now pay later services, or banking with us at Australia Post.

Pay loans and credit cards on time

Regularly paying off at least the minimum amount on credit cards, personal and home loans is a great way to show you’re in control of your debt.

Some products let you pay off more than your scheduled repayments. If you’re able to pay more on an eligible product, this helps reduce monthly interest charges and helps improve your creditworthiness. Remember, you can avoid credit card interest charges by paying off the full amount by the due date.

Want to learn more about different payment options that could suit you? Get tips on credit card and personal loan repayments and managing your home loan.

If you’re struggling to meet minimum repayments on your NAB credit card or loan, reach out to NAB Assist for support.

If money’s tight, it can be hard to keep on top of regular bills and repayments. Money Smart, opens in new window can help you understand your options and get on top of debt.

Limit your credit applications

Each new credit application is added to your file and temporarily lowers your score. Multiple credit applications within a short time can be seen as a risk and impact your creditworthiness. It’s also important to consider the kind of credit you’re applying for. Doing your own research and talking to lenders to understand what the best product may be for your financial circumstance before you apply is also a good idea. 

Build up your savings

If you have money regularly coming in, maintaining a savings buffer will give you reassurance that you’ll still to be able to pay bills on time if something unexpected happens. Learn about the importance of building an emergency fund.

This is also a great way to demonstrate you’re a good credit risk when applying for a credit card, personal loan or home loan.

Everyone has a different approach when it comes to saving money. Read our advice to help you save more money, and track your savings goals in the NAB app.

What to do during hard times

If you’re going through a difficult time financially, it’s important to try and keep on top of expenses as best you can. Missing loan or credit card repayments may impact your credit score, so the best way to avoid this is to take action early on. By setting up a financial hardship arrangement with your existing lenders and banks, you can ensure your credit score remains healthy, so when things are better for you and your finances, you can pick up where you left off. 

Learn about our financial hardship assistance.