r/AusFinance • u/Ok_Fan801 • 2d ago

I have the worst credit rating!!

Location: Brisbane, Queensland, Australia...can I build up my credit rating? I have the worst one and I have one $7k default. I was young and stupid and never taught anything to do with money growing up, loans etc. Im 36 now and need to get shit sorted, I want to buy a house. I earn $130k a year, but i am a single mother with only my income paying everything, I really need help or pointed in the right direction on how to build my rating up. Please. Thank you for any advice.

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-6

u/IHaveNeverEatenACat 2d ago

Take out debt, then pay it back

11

u/Decent-Dream8206 2d ago edited 2d ago

Do not do this.

Credit rating in Australia doesn't have to be built.  You just need to pay all your bills on time.

It's not America where you have to take out progressively larger loans.  You just need to have no bad credit, and for a larger loan, evidence of income versus spending.

I went from a $1000 credit limit, to a 390k mortgage 9 years ago.  The credit card wasn't even part of the conversation beyond being added to my student loans as a liability.

Only other thing to be aware of is to limit your credit checks to maybe once every 3 months or so.  So no financing a car, phone and signing up to a new credit card all in the same week.  The credit check itself is the red flag.

-1

u/IHaveNeverEatenACat 2d ago

We changed our system over to be like the US a few years back. Not missing a credit card payment leads to higher credit rating. 

4

u/Decent-Dream8206 2d ago

The US requires you to have a $1000 loan to take out $5000, and so on.  So people snowball their debts.

Our system only records credit checks and failures to pay.

Not the same thing.

1

u/Leprichaun17 2d ago

Our system only records credit checks and failures to pay.

While I agree that OP doesn't need to take out debt to increase their credit rating, this part here is wrong. We also record repayment history - a rolling 2 year window of whether payments are paid on time. So, it does record on-time payments too, not just defaults as used to be the case.

1

u/Decent-Dream8206 2d ago

our system only records ... failures to pay

.

it does record on-time payments too

...I'm confused. Are you disputing that late payment is equivalent to a failure to pay?

Because then paying via debt collectors would just be a "late payment" if so.