What Affects Your Credit Score?


You’ve checked your credit report and discovered you have a good credit score. However, it’s still important to understand what affects a credit score and what you can do to keep your credit rating high. Sometimes small decisions can have a larger effect than people realise, and when added together can affect your credit score for better or worse.

In the old days, only negative borrowing patterns – like late payments and defaults – could affect your credit score. However, since the introduction of Comprehensive Credit Reporting (CCR) positive borrowing patterns – like making your payments on time – can help you increase your credit score.

Here’s a few things that can damage your credit score:

  • Having a bill that’s overdue by 60 days or more when the debt is at least $150.
  • Applying for several credit or loan products at once or over a short period of time.
  • Maxing out your credit limit.
  • Increasing or making no efforts to reduce any outstanding debts you may have.
  • Missing a repayment or making late payments.

  • Credit card balance transfers can also affect your credit score – every time you apply for a balance transfer to repay a credit card debt, an official enquiry is made on your credit report. Your credit score can be negatively affected if you are rejected for a balance transfer, or if you aren’t able to meet the minimum repayments on the balance transfer, or if you apply for back-to-back balance transfers.
  • Applying and being rejected for a home loan or credit card.
  • Refinancing your home loan – if you don’t do your research beforehand, and end up getting rejected for the loan.

8 things you may not know can affect your credit score

Things like your payment history, debt usage, credit age, account mix and credit enquiries, are known to affect your credit score. However, here are 8 other things that you may not know that can also affect your credit score.

Reporting errors

Errors can end up on your credit report and are items that are simply inaccurate. This can happen from data entry mistakes or even identity theft. If you do find an error on your credit report, be sure to dispute it with the credit agency reporting the error. If you have multiple errors, you need to dispute each one separately with the agency reporting the errors.

Telecommunication and power bills

Under Comprehensive Credit Reporting, only your repayment history from licenced credit providers can be recorded, and this excludes telecommunication (incl. mobile phone) and power companies.

However, whilst these types of repayments are not recorded on your credit report, they may be recorded as defaults if they are for $150 or more, and over 60 days overdue – which can seriously hurt your credit score.

Applying for an insurance policy

Insurance companies might access your credit history before granting you a policy. That access is usually a hard enquiry. While one hard enquiry won’t affect your score much, several can. So apply cautiously and avoid seeking a new policy while also applying for a loan and/or new credit card.

Getting a new mobile plan

Mobile providers also often pull your credit report when you sign up for a plan, which can be a hard enquiry on your report.

Requesting a credit limit increase


When you ask your lender to change the terms and conditions associated with your credit card, they are likely to review your credit history. That will put one of those hard enquiries on your credit report.

Not paying your rent

Similarly to telecommunication and power bills, under Comprehensive Credit Reporting, unpaid rent may be recorded as a default and can seriously hurt your credit score. More importantly, if your rent is consistently late you may be “blacklisted” on a tenant database, affecting your chances of securing a future rental property.

Not advising creditors when you change your name

Not advising creditors when you change your name is one of the most common reasons for inaccuracies on credit reports. If you get married or divorced, you must inform all financial institutions about these change of details so that no mistakes end up on your credit report.

Your partner

Whilst credit reporting agencies keep separate credit scores for spouses, the actions of your partner can still impact your credit score. If your partner fails to pay a joint bill or joint credit card on time, both of your credit scores will be negatively affected.

Surprising factors that don’t affect your credit score

There are plenty of things that can affect your credit score, however, while the following can influence your ability to get approved for a loan, they don’t directly factor into the algorithm that calculates your credit score.

  • Income
  • Bank balances
  • Superannuation balance
  • Employment status
  • Age
  • Marital status
  • Debit or prepaid card usage.

B M Peachey

B M Peachey, has over 15 years of experience investing in property and the stock market, in both New Zealand and Australia. She has a post-graduate degree, with qualifications in Finance and Mortgage Broking and in Accounting and Bookkeeping. She is passionate about ensuring people have access to credible, reliable, and easy to understand information to help them get in control of the life they REALLY want to live.

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    Disclaimer: The information in this article is general in nature as it has been prepared without taking account of your specific objectives, financial situation or needs. Therefore, you should consider whether the information is appropriate to your circumstance before acting on it, and where appropriate, seek professional advice from a finance professional such as an adviser.