Learn how credit ratings are generated and find out how to improve your credit score with our guide to credit reports during COVID-19.
The COVID-19 (coronavirus) crisis has forced many Australians to consider options for financial assistance, from applying for a pause on loan repayments to exploring payment options and hardship plans to manage their bills. Short-term help may be necessary and it’s important to consider the options you have available before making a decision that could have long-term impacts to your credit rating.
If you’re unsure of why a good credit score is important, or how to maintain one, read on.


What is a credit rating and how often is it updated?

Also known as a credit score, a credit rating simply summarises for lenders (such as banks and credit unions) your reliability as a borrower1. In Australia, it’s generally calculated as a number between 0-1200, with ratings towards 1200 classified as excellent and rating towards 0 classified as low2. Because your credit score directly affects your access to securing financing – from a home loan application to buying a car on credit – it’s important that you take steps to maintain as good a score as possible.

How can I maintain a good credit score?

The final number of your credit rating is generated by gathering and evaluating relevant and personal financial information. This could include current and previously held credit cards, as well as your repayment history of these products, any defaults on or non-payment of utility bills and how many times you’ve applied for credit in recent years. A good credit history is generally maintained when you’ve been diligent about paying bills on time, outstanding debts are being regularly and routinely repaid and you haven’t applied to a large number of lenders for credit.

Be aware that a payday or small personal loan – a credit product that’s generally characterised by a small amount of money lent and a quick turnaround for paying it back – could affect your credit score if you have trouble paying it back on time3. Typically, these loans have soaring interest rates and quick repayment schedules, making them difficult to keep up with. Applying for too many loans will also have a negative effect on credit scores. Visit the Moneysmart website for some less costly alternatives to payday loans4. In either case, always read the small print and consider the pros and cons of these products carefully.

Will any assistance offered as a result of coronavirus affect my credit rating?

The coronavirus pandemic has created financial uncertainty for many Australians. The Federal Government has introduced a number of financial assistance options including loan and credit card deferrals for individuals affected by COVID-19, giving successful applicants the option of pausing payments, provided their pre-COVID-19 payments were up to date5. The deferral period of these payments will have no effect on credit ratings, according to the Australian Banking Association6.

It is important for people to understand what a loan or credit card deferral can mean. For example, a loan pause can result in your loan term being extended overall if you want to preserve the same repayment rate after the pause ends; or it can cause a higher repayment rate, if you the loan term is not extended. It is important to consider all the information upfront and making the best decision for your personal circumstances.

How can I check my credit score?

You can access your credit score rating easily and free of charge. You can find a list of credit score rating sites via the Moneysmart website. You can also check your credit report, which is a document that explains all relevant information related to your credit score in detail, and it’s a good idea to do this every year. Obtaining a credit report takes longer – up to 10 days in some cases – and a fee will often be charged if you’d like more than one report a year or need the process expedited.

Can I improve my credit rating or change my credit report?

There are steps you can take to improve your credit score over time to assist in future financial planning. Some initial steps you can take are to reduce your credit limit, put a pause on applying for credit through loans and credit cards, and set up reminders or direct debits to ensure that you pay bills, from utility to credit cards, on time7 . While some information can affect your rating for several years, after taking positive steps, your score should gradually improve.

You can only change incorrect information on your credit report. This may include your name, date of birth or address, if a debt is listed twice or the amount of debt is wrong, or if a debt that is not yours is incorrectly noted on the report. You can find out more about fixing these errors on the Moneysmart website.

Where to get extra help

If you’re suffering financial hardship as a result of COVID-19, it may help to talk to a financial counsellor who can provide guidance on how to manage your debts and finances. For free financial counselling, call 1800 007 007 or visit the National Debt Helpline or the contact Financial Rights Legal Centre if you’re in NSW and in need of help or advice (including legal advice).

1Moneysmart.gov.au: Credit scores and credit reports 
2Moneysmart.gov.au: Credit scores and credit reports
3Moneysmart.gov.au: Payday loans
4Moneysmart.gov.au: Payday loans
5Australian Banking Association: A COVID-19 mortgage deferral won’t affect your credit rating
6Australian Banking Association: A COVID-19 mortgage deferral won’t affect your credit rating
7Moneysmart.gov.au: Credit repair

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Important information

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