Since the global financial crisis, your credit rating has never been so important when borrowing money from a bank in Australia.

A financial health check of sorts, your credit rating tells potential lenders in a snapshot whether you are a risky borrower. Your past mistakes can affect your financial future – and what you can do to sharpen up your financial record.

There are a few places where you can get a copy of your credit record or credit rating for free. These include www.mycreditrating.com.au, www.dnbcreditreport.com.au and.www.mycreditfile.com.au.

Remember, Australian banks can afford to be picky – they are the ones with the money. So if you have got a bad credit, use this these ten tips to tidy up your lose money ends.

Ten ways to improve your weak credit rating include:

  1. Know that it is quite easy to get a bad credit rating. Anyone that has ever defaulted on a loan, taken too long to repay a debt, that interest-free loan you took out in your teens, or even not returned a video can end up with a bad credit rating.
  2. Thoroughly check your credit file. If you believe there is a mistake, you can dispute it. Contact the credit reporting agency to get any mistakes rectified.
  3. If you get no relief about disputed charges on your credit file, talk to the Financial Ombudsman Service.
  4. Decrease any unnecessarily large credit limits. Even if you have a $0 balance on your credit card, lenders will consider your potential debt amount – which means the credit card limit.
  5. If you don’t have a credit card, apply for one. As counter-intuitive as this sounds, it is not really possible to improve a bad credit rating without showing you can actually pay back credit in a timely manner and are a not a risk to the bank.
  6. Pay your debts on time. Use options like direct debit to make sure you don’t miss a bill.
  7. Show you can manage a mix of different debt types – for example a small personal loan and a credit card. Of course, do not overextend yourself.
  8. Do not max out the plastic. When determining a credit rating, the debt to available credit ratio is considered. If you have $5,000 credit, but $2 available, you are not looking like a winner.
  9. Avoid bankruptcy. As tough as your debt may seem, being an undischarged bankrupt will stay with you for seven long years, and greatly impact your financial life.
  10. Take charge of your financial future and get some counseling to ensure you stay debt free.