How to Improve Your Credit Score Before Applying for a Loan
Simple Steps to Boost Your Chances of Approval
When it comes to applying for a home loan, investment loan, or even a personal loan, your credit score plays a big role in how lenders assess your application. A good credit score can mean lower interest rates, better loan terms, and faster approvals — while a poor score can result in delays or outright rejection.
Here’s a practical guide to help you improve your credit score before applying for a loan.
✅ 1. Check Your Credit Report First
Start by requesting a free credit report from one of Australia’s major credit reporting agencies (Equifax, Experian, or illion). Look for any errors, defaults, or inconsistencies. If you find something incorrect, dispute it with the credit bureau immediately.
💡 Tip: You’re entitled to one free credit report every year from each agency.
✅ 2. Pay Off Overdue Debts
If you have any unpaid debts — especially defaults or collections — make it a priority to settle them. Outstanding debts can significantly damage your score. Paying them off won’t remove them immediately from your report, but it will improve your overall creditworthiness over time.
✅ 3. Make All Payments On Time
Lenders want to see that you’re reliable with repayments. Set up direct debits or reminders to ensure you pay your:
- Credit cards
- Utility bills
- Phone plans
- Personal loans
Even one missed or late payment can impact your score negatively.
✅ 4. Lower Your Credit Card Utilisation
Your credit utilisation ratio (how much of your credit limit you use) is a major factor. If you’re constantly maxing out your card, lenders may see you as a risk — even if you make repayments on time.
Aim to keep your balances under 30% of your limit. Better still, pay them off in full each month.
✅ 5. Avoid Applying for Multiple Loans at Once
Every time you apply for a loan or credit card, it leaves a mark on your credit report as a hard enquiry. Too many applications in a short time frame may lower your score and raise red flags with lenders.
Instead, speak to a mortgage broker (like us!) who can compare options without affecting your credit.
✅ 6. Keep Old Accounts Open
Length of credit history matters. If you’ve had a credit card or account in good standing for years, keep it open — even if you don’t use it much. It shows stability and responsible credit use.
✅ 7. Consolidate Debt if Needed
If you’re juggling multiple credit cards or personal loans, debt consolidation may help you reduce your monthly payments and improve your ability to repay — which positively affects your credit profile.
Speak with a broker to explore consolidation options that won’t hurt your score in the long term.
🎯 Final Thoughts
Improving your credit score is one of the best things you can do before applying for a loan. Not only will it increase your chances of approval, but it can also save you thousands in interest over the life of your loan.
At Kangaroo Finance & Mortgage, we offer free credit assessments and personalised advice to help you prepare for your loan application with confidence.
📞 Need help getting loan-ready?
Book a free consultation today and let’s create a finance strategy that works for you — credit score included.
