5 things that are costing you your credit score

Published on June 15th, 2020
  Written by 
Bill Tsouvalas
Bill Tsouvalas is the managing director and a key company spokesperson at Savvy. As a personal finance expert, he often shares his insights on a range of topics, being featured on leading news outlets including News Corp publications such as the Daily Telegraph and Herald Sun, Fairfax Media publications such as the Australian Financial Review, the Seven Network and more. Bill has over 15 years of experience working in the finance industry and founded Savvy in 2010 with a vision to provide affordable and accessible finance options to all Australians. He has built Savvy from a small asset finance brokerage into a financial comparison website which now attracts close to 2 million Aussies per year and was included in the BRW’s Fast 100 in 2015 as one of the fastest-growing companies in the country. He’s passionate about helping Australians make financially savvy decisions and reviews content across the brand to ensure its accuracy. You can follow Bill on LinkedIn.
Our authors

Fact checked

At Savvy, we are committed to providing accurate information. Our content undergoes a rigorous process of fact-checking before it is published. Learn more about our editorial policy.
Credit score what is costing

At Savvy, our mission is to empower you to make informed financial choices. While we maintain stringent editorial standards, this article may include mentions of products offered by our partners. Here’s how we generate income.

Your credit score is important when applying for a loan. This what lenders look at to determine your creditworthiness. A good credit score is something that we all aim for. However, there are a few things that you are doing that can affect your credit score in all the wrong ways. Here are 5 things that are costing you your credit score..

1. Missing payments

One of the main things that can see your credit score drop from stellar to becoming questionable among lenders is missing payments. A large portion of your credit score is based on how you are able to meet payments. Missing one payment can be something that some lenders overlook, but making this a habit can drag your credit score low and cause lenders to see you as a risky lender. It can limit your loan choice.

2. Not checking your credit report

According to Equifax, one-third of Australians expect a better credit deal from lenders based on their financial history but only 1 in 10 access their credit report before doing this. Your credit report is something that needs to be checked before applying for a credit card. Not only will this show you any outstanding debts and accounts that you need to pay off, but it can also reveal errors that can affect how lenders view your borrowing habits. You can get a free copy of your credit report each year from places like Equifax.

3. Maxing out your credit card

Having a credit card can be a convenient piece of plastic that can help you take care of expenses. Budgeting around your credit can also help you maximise your credit card in the best possible ways. However, falling into the habit of exceeding your credit card limit can affect your credit score. A rule of thumb is to keep your credit utilisation ratio at 30% or less. This will show lenders that you are able to manage credit well.

4. Applying too many times

There might have been a credit card that you were eyeing that comes with the best interest rate, annual fee, and a great reward program. However, your application was rejected. You decided to apply through multiple lenders to increase your chances of landing the card. Applying too many times will lead to financial institutions making an enquiry on your credit report. Having too many credit enquiries can negatively affect your credit report as it will make you appear to be an irresponsible borrow.

5. Defaulting on payments

Defaulting on your credit card repayments is a red flag. It will also be listed on your credit report which will affect your application for other credit cards in the future. It is vital to choose a credit card that has monthly repayments that are within your budget. If you find that you are not getting the best value for your money, then it’s time to change your card.

Did you find this page helpful?

Thanks for your feedback!

This guide provides general information and does not consider your individual needs, finances or objectives. We do not make any recommendation or suggestion about which product is best for you based on your specific situation and we do not compare all companies in the market, or all products offered by all companies. It’s always important to consider whether professional financial, legal or taxation advice is appropriate for you before choosing or purchasing a financial product.

The content on our website is produced by experts in the field of finance and reviewed as part of our editorial guidelines. We endeavour to keep all information across our site updated with accurate information.

In this article

Share this article

Share on facebook
Share on twitter
Share on linkedin
Share on email
Share on pinterest

Smart money saving tips

Subscribe to our newsletter.

By subscribing you agree to our privacy policy

Related articles

Credit score what is costing

We'd love to chat, how can we help?

By clicking "Submit", you agree to be contacted by a Savvy broker and to receive communications from Savvy which you can unsubscribe from at any time. Read our Privacy Policy.