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Getting a loan with a bad credit history can be tricky. Many banks and other traditional lenders have strict lending criteria that excludes those with bad credit scores, making it seem near-impossible for them to obtain financial assistance when they need it.

Luckily, there are lending companies like Ume Loans who specifically service customers who don’t meet traditional financial criteria or have a less than perfect credit history. With the help of a loan from these companies, borrowers with bad credit are empowered to obtain finance and make timely repayments, which can help establish a positive credit history and improve their credit score over time.

With some planning and persistence, coming back from bad credit is totally possible. For our top tips on how to improve your credit score, read on.

Understanding your credit report and score

A credit report is a summary of your credit history, meaning it details your spending and payment history across all credit accounts you have or have had in the past.

A credit score is a numerical representation of your credit report. This score is what is used by lenders and banks when assessing you as a potential borrower, and is calculated using a variety of factors. These include your payment history, credit utilisation, length of credit history, types of credit accounts, and recent credit inquiries.

In Australia, there are three credit reporting agencies: Equifax, Illion and Experian. Each one reports credit information differently based on their own unique data sources and methodology, so reviewing these reports regularly is imperative to ensuring each one is accurate and up-to-date to avoid negative impacts on your credit score. Generally, you can access a free copy of your report once a year from each agency.

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Create a budget and stick to it

If your credit score leaves room for improvement, the first thing you need to do is identify where your spending is going haywire. To do this, you need a budget. A budget will help you categorise your spending and manage your money more effectively.

Creating a budget is fairly straightforward. For the first month, all you have to do is track your income and all your expenses throughout the month. Then, break down your expenses into ‘essential’ expenses, such as rent, utilities, food and loan repayments, and ‘non-essential’ expenses like dining out or entertainment.

Once your expenses have been categorised, you can create a budget for the following month that actively limits non-essential expenses and ensures all essential expenses are prioritised. By tracking your spending and sticking to this budget, you’ll already be off to a great start.

Pay off debts

Once you’ve got your budget under control, it’s time to start actively improving your credit. To do so, you’ll need to pay off your debts. Debts can negatively impact your credit score, particularly if you have missed payments or defaulted on a loan.

If you’re in a lot of debt, paying them off may seem overwhelming. But like everything, the best path of action is to tackle the high priority ones first. High priority debts are generally high-interest debts, such as credit card balances, personal loans and payday loans. Repaying these high-interest debts first will help you get a handle on interest charges and help to reduce your debts more quickly.

If you’re struggling to incorporate your debt repayments into your budget, there are services available to help with debt consolidation, which may help you manage your debts more effectively and improve your credit score over time.

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Build a Positive Credit History

Congratulations – you’ve built a budget and started paying off your debts. Next, it’s time to focus on building a positive credit history. Building a positive credit history is essential for improving your credit score, and can be achieved by making timely payments on existing debts, paying bills on time, and keeping credit card balances low.

Another important thing to avoid while trying to build a positive credit history is opening too many new lines of credit as this can reflect negatively on your credit report. It’s best to focus on maintaining your existing credit accounts and using them responsibly.

Be patient and persistent

Rome wasn’t built in a day, and nor will your credit score be. Rebuilding your credit score takes time, so it’s important to stay committed to improving your credit score even though you might not see immediate results.

Practising good credit habits like sticking to a budget, making timely repayments and keeping credit balances low will all have positive impacts on your credit score. Remember to review your credit reports regularly, too, to ensure any errors or misrepresentations are addressed.

By following these tips, you’ll be equipped with the tools you need to build positive financial habits, manage your debt, improve your credit score and solidify your financial stability.

At Ume Loans, our team of lending specialists is here to help you turn around your credit score. We offer a range of services from bad credit loans with flexible loan terms, and credit rebuilding opportunities to lending advice and support to help you get back on track.


Ready to take control of your financial future? Look no further! At Ume Loans, we specialise in providing solutions for individuals with less-than-perfect credit. Our dedicated team is here to help you secure the loan you need, tailored to your unique circumstances. Don’t let bad credit hold you back any longer—take the first step towards financial freedom and speak to our lending specialists on: (07) 5443 3863

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