What Could Be Damaging Your Credit Score (and How to Fix It)
- Jaeneen Cunningham
- Jun 24
- 6 min read
Updated: Jul 2
Your credit score is one of the most important numbers in your financial life. It plays a vital role in your ability to borrow money, rent a home, get a mobile phone plan, and even land certain jobs. But while many Australians know a good credit score is important, fewer realise just how easily it can be damaged — and often by everyday habits that might seem harmless.
In this article, we’ll walk you through the common behaviours and overlooked factors that could be dragging your credit score down. More importantly, we’ll explain how to correct them so you can maintain or rebuild a strong credit profile.
What Is a Credit Score?
Before diving into what can damage your credit score, let’s quickly recap what a credit score actually is.
In Australia, your credit score is a number between 0 and 1,000 or 1,200 (depending on the credit reporting agency: Equifax, Experian, or illion). The higher the number, the better your creditworthiness in the eyes of lenders. It’s calculated based on your financial behaviour — such as how reliably you pay bills, whether you have debts, and how often you apply for credit.
Here’s how most credit scores are classified:
Score Range | Rating |
800 – 1,000+ | Excellent |
700 – 799 | Very Good |
625 – 699 | Good |
550 – 624 | Fair |
0 – 549 | Below Average |
1. Late or Missed Payments
One of the biggest mistakes you can make is consistently paying your bills late — or worse, not paying them at all. This includes:
Credit card payments
Personal loans
Home loans
Utility bills
Buy Now Pay Later accounts (like Afterpay or Zip)
Even a single missed payment can be recorded on your credit report and stay there for up to 2 years. If the missed payment turns into a default (meaning it remains unpaid for 60 days or more and is over $150), it could remain on your file for 5 years.
How to fix it: Set up direct debits or calendar reminders to pay your bills on time. If you’re struggling to pay, contact your provider early — many companies have hardship teams that can help without reporting a default.
2. Too Many Credit Applications
Each time you apply for a loan, credit card, or even some phone and utility plans, a hard inquiry is recorded on your credit report. Too many applications in a short period can make lenders think you’re in financial distress, which may lower your score.
This is especially important with Buy Now Pay Later services — many people don’t realise that some of these applications can be considered credit checks.
How to fix it:Only apply for credit when you really need it. When comparing products, do your research first without submitting multiple applications. Where possible, use pre-qualification tools that don’t affect your score.
3. High Credit Card Balances
Even if you pay your credit card off on time each month, carrying a high balance can still hurt your credit score. That’s because lenders look at your credit utilisation ratio — the percentage of your available credit that you’re actually using.
For example, if you have a $10,000 credit limit and regularly carry a $7,000 balance, you’re using 70% of your credit, which can signal risk to lenders.
How to fix it:Aim to keep your balances below 30% of your available limit. If you’re struggling to repay, consider setting up a debt reduction plan or consolidating debt into a lower-interest loan.
4. Defaults and Serious Credit Infringements
Defaults are among the most damaging entries on a credit report. They occur when you fail to pay a debt of $150 or more and it remains unpaid for over 60 days. Serious credit infringements, such as when a creditor cannot contact you for at least six months, are even worse.
Both can remain on your credit file for five to seven years and significantly impact your borrowing ability.
How to fix it:If you’ve already defaulted, paying the amount won’t remove the record, but it will be updated as "paid" — which is better than unpaid. Going forward, stay on top of your payments and talk to creditors early if you run into trouble.
5. Too Many Credit Cards or Loan Accounts
Having multiple lines of credit can suggest that you are over-reliant on debt — especially if you’re only making minimum payments. Even unused credit cards can affect your borrowing capacity, as lenders assess your total available credit.
How to fix it:Close any old or unused accounts you no longer need. Be strategic about consolidating debt if it helps you save interest and manage fewer repayments.
6. Short Credit History
A short credit history doesn’t necessarily damage your score — but it can limit how high your score can go. Lenders like to see a long track record of responsible credit use. If your file is too thin, it’s harder for them to assess your reliability.
How to fix it:Consider maintaining a low-limit credit card and using it responsibly. Over time, this builds your credit profile. Avoid closing your oldest accounts unless absolutely necessary.
7. Changing Address or Job Too Often
Frequent moves or job changes can be a red flag for lenders. It may suggest instability or risk, especially if you’re applying for a loan.
While this doesn’t directly affect your credit score, lenders may view it as part of their credit decisioning process, particularly if you’re applying for a home loan.
How to fix it:Make sure all your contact details are up to date with banks and credit agencies. If you do move or change jobs often, maintain consistency in other areas like bill payments and savings habits.
8. Errors on Your Credit Report
It’s surprisingly common for credit reports to contain incorrect information — such as:
Accounts that don’t belong to you
Incorrect payment statuses
Outdated defaults
Duplicate listings
These errors can negatively impact your score and your ability to borrow.
How to fix it:Check your credit report at least once a year with all three major credit bureaus in Australia:
Equifax
Experian
If you find an error, you can request a correction directly with the credit reporting agency or the credit provider.
9. Joint Accounts and Co-Signing Loans
If you’ve co-signed a loan or hold a joint account with someone who is financially irresponsible, their poor repayment behaviour could end up on your credit report too. This includes partners, family members, or even friends.
How to fix it:Be cautious about taking on joint financial commitments. If you do, make sure you trust the other party and have clear agreements in place about repayments.
10. Not Having Any Credit at All
Strangely enough, never having used credit can work against you. Without any record of how you handle credit, lenders have nothing to go on. This is often a problem for young people or those who have always paid in cash.
How to fix it:Start small: consider a low-limit credit card, store finance, or a phone plan in your own name — and pay it off diligently.
How Long Do Negative Marks Stay on Your Report?
Type of Listing | Duration on Credit Report |
Credit enquiry | 5 years |
Missed repayment | 2 years |
Default | 5 years |
Serious credit infringement | 7 years |
Bankruptcy | 5 – 7 years |
Court judgment | 5 years |
Final Thoughts: Take Control of Your Credit Health
Your credit score isn’t fixed — it’s a living reflection of how you manage your money over time. The good news is that even if your score has taken a hit, you can rebuild it through consistent, responsible financial behaviour.
If you’re planning to apply for a home loan, personal loan, or even a rental property, it's worth checking your credit report in advance. Better yet, speak to a trusted mortgage broker or financial adviser to help you make a plan to get your finances in top shape.
Quick Tips to Improve Your Credit Score
✅ Pay bills on time (set up automatic payments)
✅ Limit credit applications and space them out
✅ Keep credit card balances low
✅ Close unused credit accounts
✅ Check your credit report regularly
✅ Fix any errors immediately
✅ Communicate early with creditors if you’re in hardship
✅ Maintain some low-level credit to build history
Need help navigating your credit or getting loan-ready? As an experienced mortgage broker, Etairos Finance can guide you through your options and help you avoid credit pitfalls that could cost you in the long run.
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