Your credit score is more than just a number—it’s a reflection of your financial behaviour, and it plays a critical role in determining your ability to access loans, secure housing, or even land a job. While credit cards can be valuable tools for building credit and managing cash flow, certain everyday habits can quietly sabotage your credit score without you even realising it. In this article, we’ll explore some of the most common credit card mistakes Australians make and how to avoid them.
Carrying High Balances
One of the biggest contributors to a poor credit score is your credit utilisation ratio—the amount of credit you’re using compared to your total available credit. Maxing out your card or consistently carrying a high balance signals to lenders that you may be overextended and struggling to manage your finances.
Tip: Aim to keep your balance below 30% of your limit at all times. Even better, try to pay your card off in full each month to avoid interest charges and keep your utilisation low.
Making Late Payments
Missing a payment—even by a few days—can result in a negative mark on your credit report. Payment history is the most influential factor in your credit score, and lenders want to see consistency and reliability.
Tip: Set up direct debits or calendar reminders to ensure you never miss a due date. If you’re concerned about fees or want to simplify your finances, consider comparing low fee credit cards that suit your lifestyle and reduce your ongoing costs.
Applying for Too Many Credit Cards at Once
While it might be tempting to apply for multiple cards to access sign-up bonuses or increase your credit limit, too many applications in a short time can signal risk to lenders. Each application results in a ‘hard inquiry’, which can temporarily lower your credit score.
Tip: Be selective and apply only when necessary. Research thoroughly before applying so you know you’re choosing the right card for your needs.
Closing Old Credit Accounts
It might seem logical to close credit cards you no longer use, but doing so can actually hurt your credit score. Why? Because it reduces your total available credit and shortens your credit history—both of which impact your score.
Tip: If a card has no annual fee and isn’t hurting you financially, consider keeping it open to maintain your credit history and available limit.
Ignoring Your Credit Report
Many Australians never check their credit report until it’s too late. Errors, identity theft, or incorrect information can drag your score down without you even realising it.
Tip: You’re entitled to a free copy of your credit report every three months from major reporting agencies. Review it regularly and dispute any inaccuracies.
Only Paying the Minimum Amount
While paying the minimum keeps your account in good standing, it does little to reduce your debt. Over time, interest builds up, increasing your balance and credit utilisation—two things that can slowly erode your score.
Tip: Whenever possible, pay more than the minimum. Even an extra $50 a month can make a significant difference to your balance and your financial health.
Using Credit for Everyday Expenses Without a Plan
Using your credit card to pay for groceries, petrol, or bills can be a smart way to earn rewards or manage cash flow—if you have a plan to pay it off. However, if you’re relying on credit to get through each month, you may be slipping into a cycle of debt.
Tip: Use your credit card strategically and track your spending. Stick to a budget and avoid using credit as a fallback for overspending.
Your credit score isn’t just shaped by major financial decisions—it’s influenced by the small, repeated habits you build over time
By understanding which behaviours negatively affect your score and taking simple, proactive steps, you can maintain a strong credit profile and greater financial freedom. Whether you’re seeking better rewards or more manageable terms, exploring low fee credit cards can be a smart first step toward better credit habits and long-term stability.
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