Well, it can take a bit of time and does need you to keep doing the right things, but it is possible!

Here are 5 key habits for building a healthy credit score:

1. Checking your score regularly

Knowledge is power! It sounds simple but just knowing your score is a good first step. If you see where you are to begin with, it will give you an idea of what steps you might need to take. Then checking it regularly will allow you to see if you are making progress. It can also help you spot any errors or fraudulent activity on your credit file so you’re not caught out when you apply for credit.

2. Paying on time

This kind of goes without saying, but in order to get and keep a decent credit score, you need to repay what you borrow within the terms agreed. This has never been more important with Comprehensive Credit Reporting (CCR) now beginning to happen in Australia. CCR basically means that credit providers can now provide information on your open accounts and repayment history to the Credit Reporting Bodies (CRBs). Direct debits could be your friend here!

3. Doing research and only applying when you need it

Too many applications for credit can drag your score down so a bit of research beforehand is a good idea.

Firstly, research the market, compare products and read all that fine print to make sure you meet the eligibility criteria. This can help you avoid the dreaded rejection letter and ensure you get something that is right for you and your needs.

Secondly, only apply when you need it!

4. Applying for different types of credit

Enquiries for different types of credit and with different types of lenders can count differently towards your score. Home loans, personal loans and credit cards are all counted differently in the CRB’s scoring algorithm. Also, an enquiry with (for example) a payday lender may be viewed less favourably than one with a bank.

5. Get a free annual copy of your credit report

Everyone is entitled to obtain a free copy of their credit report from each of the CRBs in Australia, once a year. The process can be manual and take a week or more but it can be worthwhile to check for any errors or inconsistencies on each of these reports. Errors can impact your score and potentially an application for credit.

This article originally appeared on the Credit Savvy blog and has been republished here with permission.