5 tips on how to get your bad credit in shape this new year

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
, updated on November 25th, 2021       

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Having bad credit shouldn’t spell the end of your financial freedom. Although you might have limited options, for now, you can still work your way into building a good credit report. It’s time to rise out of your financial ashes and work your way to keeping your credit in shape with these five tips. If you fall off the bandwagon, don’t stress. Dust yourself and try again.

Get your credit report

You will have to know what needs to be fixed before trying to fix it. Your credit report will be the first stop in terms of finding out what mistakes you have made that have led you to have bad credit. Take time by going through it, and finding out what affects your score negatively. You can get a copy of your credit report from Equifax, which will also give you an insight in terms of what might raise red flags when lenders look at it.

See what needs to be fixed

A report by Fox Symes shows that 1 in 4 credit reports have errors. Once you have your credit report you will have to check for any mistakes such as:

  • Past due accounts that are late, that have been paid or have been sent to collections
  • Accounts that have been maxed out or are over the credit limit
  • Incorrect information, such as accounts that are not yours or payment that has been incorrectly been reported late and so forth
  • Personal information is up to date

Start setting up reminders

Not meeting payment is one of the major factors that can affect your credit score. You can help yourself by setting up payment reminders with your bank which will send you an email or a text to remind you. The other option you have available to you is having your payments debited to your account through automatic payments. If you want to harness the power of learning true money management then using an automated payment won’t help. You will have to use ways that work for you in terms of reminding you.

Change your spending habits

To avoid repeating the same mistake over and over again, it’s best to be realistic with yourself and look for areas in your life that you can make some financial cuts or adjustments. Another way that can help you is by making a budget and sticking to it. You can also get the help of an accredited financial advisor who will be able to help you find your financial blind spots that you could’ve overlooked.

Cut it

If you have trouble with your credit and can’t stop spending using it then you will have to let it go. Pay off and close account that are constantly pushing you into debt. This could be anything that has high interest rates that you are struggling to pay off. If it has to go as far as cutting it up, then go for it. In the end, you want to build up a healthy credit report that will help open more doors for you. There are plenty of bad credit loan options that are available online that you can compare and select from to ensure that you get a loan that works for you, and kicks debt to the curb.

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