There’s a point in many people’s financial journeys when they realise their credit score isn’t where it needs to be. Maybe you missed a few repayments. Maybe you defaulted years ago, and it’s still hanging over your record. Or maybe you’ve simply never had credit in your name before. Whatever the case, rebuilding your credit isn’t about overnight hacks—it’s a process of deliberate, consistent action.
This guide strips back the jargon and lays out exactly what you can do to build, or rebuild, your credit score. No shortcuts, no false promises—just real steps that work in the context of how credit operates here.
What Is a Credit Score?
Your credit score is a three-digit number, usually somewhere between 0 and 1200, that represents your trustworthiness as a borrower. Lenders use it to judge how risky it would be to give you money. The higher the number, the lower the risk.
It’s calculated by credit reporting bodies like Equifax, illion, and Experian using data like:
- Credit enquiries (every time you apply for a loan or card)
- Repayment history
- Defaults or overdue debts
- Bankruptcies or court judgments
- Number and type of credit accounts
If you’ve got defaults, missed payments, or a history of applying for multiple loans in a short space of time, chances are your score has taken a hit. But the good news is: it’s not permanent.
Step 1: Check Your Credit Report Fully
The first move is to get eyes on what lenders are seeing. You can request a free copy of your credit report every three months from the major credit bureaus. Look out for:
- Inaccuracies (e.g. debts that aren’t yours)
- Old listings that should’ve expired
- Duplicate accounts
If you spot errors, you can file a dispute and have them corrected—this alone can give your score a small lift.
Step 2: Stop the Bleeding
Before you can rebuild, you’ve got to stop whatever’s dragging your score down. That means:
- Bringing overdue accounts current – Even a single missed payment can hurt your score for up to two years.
- Avoiding unnecessary credit applications – Every application is logged, and multiple enquiries can look desperate.
- Freezing new debts – If you’re struggling to stay afloat, now isn’t the time to open new credit lines unless they’re part of a consolidation strategy.
Step 3: Pay On Time, Every Time
Sounds basic, but it’s one of the biggest factors influencing your credit score. Even utility bills and Buy Now Pay Later repayments can show up in your file. Set up direct debits and calendar reminders—whatever works.
Step 4: Consider a Credit Product to Rebuild
Once you’ve got the basics under control: on-time payments, no new defaults, and a clearer financial structure, it might be time to take the next step: reintroducing credit. This doesn’t mean diving back into borrowing just for the sake of it. But certain credit products, if used wisely, can help you shift how lenders (and credit bureaus) see you.
The goal isn’t to borrow more, it’s to show that you can borrow better. Used strategically, the right type of loan or credit facility can help demonstrate a track record of responsible behaviour and financial stability.
That brings us to a key question for many people trying to rebuild:
Can Taking a Loan Help My Credit Score?
It might sound counterintuitive, but responsibly managing new credit can help rebuild your score. For individuals who have been rejected by banks, there are specialised lenders. Securing and diligently repaying one of the available large loans for bad credit to consolidate debt, for example, can demonstrate positive financial behaviour to credit bureaus over time.
But—and this is crucial—it only helps if you’re confident in your ability to meet every repayment. Missing just one can undo all your progress.
These bad credit personal loans often come with higher interest rates, so it’s not a decision to make lightly. But for some, the benefits can outweigh the costs, especially if the funds are used to:
- Pay off multiple high-interest debts
- Reduce reliance on revolving credit (like credit cards)
- Reorganise finances to get back on track
Make sure you compare lenders carefully—some offer more flexible terms or will assess your application based on recent income stability, not just your credit score. Review the comparison rate (which includes fees), not just the headline interest.
Step 5: Add Positive Credit Behaviour (and Wait)
Australia’s shift to Comprehensive Credit Reporting (CCR) means your file now includes more than just the bad stuff. Things like:
- How often you pay on time
- How much of your limit you use
- Whether you’re reducing your debts
That means positive behaviour matters more than ever. Keep your credit card balances low, avoid maxing out accounts, and stay the course. Credit repair is slow—but it’s cumulative.
What to Avoid While Rebuilding
- Credit repair agencies: They often charge high fees for things you can do yourself. There’s no magic wand.
- Dodgy lenders: If a loan seems too good to be true, it probably is. Steer clear of payday loans and anything with exorbitant fees.
- Ignoring notices: Even small unpaid bills can turn into defaults if ignored long enough. Address every notice, even if you can’t pay right away—many providers will work out a payment plan.
The Bottom Line
Rebuilding your credit isn’t glamorous, but it is empowering. With each bill paid on time, each debt chipped away, and each smart financial move, you’re slowly rewriting your financial story. Whether you’re just starting or trying to climb back after a rough patch, remember—your credit score reflects your recent behaviour more than your past mistakes. It’s never too late to start again.
And if you’re considering applying for bad credit personal loans or large loans for bad credit, make sure it’s part of a bigger plan—not just a quick fix. Used wisely, they can be a step forward, not a step back.
