CashPal’s Guide on How to Fix Your Credit Score in Australia After the 2025 Reforms

Many Australians feel stuck with a credit score that will not budge. The 2025 credit law changes give you fresh tools and rights that can lift a weak score without expensive services. This guide explains the reforms in plain English then sets out a practical plan you can follow today.

Why credit scores matter

A credit score is a three‑digit shorthand for lending risk. Banks look at it before they approve a credit card, car loan or mortgage. A higher score unlocks lower rates and bigger limits. A poor score can add thousands of dollars to the cost of debt or shut you out completely.

The average national credit scores rose from 855 in 2023 to 861 in 2024 (Equifax Australian Credit Scorecard 2024).

Quick view of the 2025 reform package

Detailed look at each reform

1. Privacy Credit Reporting Code 2025

Ban notifications will start in October 2025 – Place a fraud ban on your file and the bureau must alert you every time a lender pulls your report. You can stop identity theft before damage appears (OAIC 2025).

Single request corrections – One form now covers all entries linked to the same fraud event or clerical error. Bureaus must fix or explain within 30 days.

Standard data definitions –  Clear “open” and “closed” markers mean a paid‑off card will no longer sit open on your file.

These changes remove black marks faster and leave less room for admin mistakes.

2. Hardship flags replace late payments

When money is tight call your lender before you miss a payment. If they grant hardship the bureau records an FHI flag. Scores ignore it and the flag disappears after one year. A missed payment would drag your score down for two years. The flag gives you breathing room without lasting damage.

3. BNPL becomes regulated credit

From 10 June 2025 all BNPL providers must:

1. Hold an Australian Credit Licence.
2. Run affordability checks if limits exceed $2000.
3. Cap total fees at $200 in the first year of any contract.
4. Join AFCA for free dispute resolution.

BNPL accounts will begin to appear on credit files. Consistent on‑time instalments can now add positive data. Missed BNPL payments will also show so set automatic repayments.

4. Insolvency changes

A creditor now needs a debt of at least $20 000 (was $10 000) to start bankruptcy. You also get 28 days to respond to a bankruptcy notice rather than 21. The public record of a discharged bankruptcy falls to seven years. These shifts mean fewer Australians are pushed into bankruptcy over small sums and those who do file can rebuild sooner.

How to fix your credit score: Step by Step

Step 1: Collect your reports

You are entitled to one free report every year from each bureau. Order online. Save PDFs for your records.

Step 2: Audit for errors

Look for:

• Accounts that are not yours.
• Duplicate enquiries on the same day.
• Paid debts still marked unpaid.
• Open accounts that should be closed.

Step 3: Dispute report inaccuracies

Send a written correction request to the bureau. Attach evidence such as police reports or paid‑in‑full letters. Under the 2025 code the bureau must respond in 30 days. If they fail or you disagree, escalate to the lender, then OAIC or AFCA.

Step 4: Negotiate hardship quickly

If you cannot meet a payment schedule email or call the lender. Ask for a temporary payment pause, reduced rate or interest‑only period. Confirm that the arrangement will be coded as hardship not arrears.

Step 5: Build positive credit history

Step 6: Use safe products when you need credit

Smarter application strategy until soft enquiries arrive

Soft enquiry legislation is under review. Until it passes use these practical tips to improve your credit score:

• Use lender pre‑qualification tools that rely on partial data rather than a full pull.
• Compare rates through brokers who can access multiple lenders with one inquiry
• Space out applications and target the product you are confident fits your profile.

What recent data tells us about real-world credit recovery

Industry and regulator data confirm the reforms are more than legislative theory. Equifax’s Credit Insights Quarterly reports that the average national score has climbed in three consecutive quarters, rising to 865 in March 2025. Analysts attribute the uptick to two forces. First, positive repayment history now enters the calculation for virtually every active loan after full adoption of Comprehensive Credit Reporting. Second, households that used hardship arrangements during the 2023 cost‑of‑living squeeze did not see their scores plunge because those arrangements are coded as score‑neutral financial hardship information (OAIC compliance bulletin, February 2025).

Fraud prevention is improving too. The Office of the Australian Information Commissioner confirmed a forty‑one percent jump in initial fraud‑ban requests between 2023 and 2024. The OAIC notes that most requests followed the regulator’s education campaign explaining the new ban‑notification right under the Privacy Credit Reporting Code 2025. Early bans stop identity‑crime defaults before they occur, preserving scores that would otherwise lose more than one hundred points.

Treasury’s impact statement on Buy Now Pay Later regulation, tabled with the Responsible Buy Now Pay Later and Other Measures Act 2024, projects that full BNPL reporting will add more than sixty million on‑time repayment events to credit files each year. The department expects this stream of positive data to lift the median BNPL user’s score by up to thirty points within two years, provided repayments remain punctual.

The combined evidence shows a clear pattern. When consumers engage with the new tools such as hardship flags, fraud bans and transparent BNPL data, their credit metrics trend upward. Policy changes are translating into measurable score gains across the country.

Final thoughts

Credit repair takes patience and routine but the 2025 reforms tilt the system in your favour. Actively remove errors, guard against fraud, work with lenders before you miss payments and let positive repayment history build month by month. Put these steps into practice and your score will rise.

Frequently asked questions

How long do defaults last?

Five years from the default date. If the debt is paid the listing updates to Paid but remains.

Can a hardship flag hurt future loan approvals?

Lenders can see the flag but most weigh it lightly compared to a missed payment. Provide context in your application.

Will cancelling unused cards help?

Only if the card charges an annual fee and you carry no other balances. Otherwise keep it open for account age and utilisation benefits.

Does BNPL now appear on my credit report?

From mid‑2025 most BNPL providers will share repayment data with credit bureaus. On‑time instalments will build your score, while late payments and over‑limit use will count against you.

How do I place a fraud ban and how long does it last?

Lodge a ban request with any bureau online or by phone. You will need ID and a brief statement of suspected fraud. The initial ban lasts 21 days and can be extended to 12 months with a police report or statutory declaration.

References

https://www.oaic.gov.au/__data/assets/pdf_file/0014/250160/24-March-2025-Privacy-Credit-Reporting-Code-2025.PDF 

https://www.dentons.com/en/insights/articles/2024/november/13/a-new-australian-credit-reporting-code-key-changes-that-credit-providers-need 

https://treasury.gov.au/review/australias-credit-reporting-framework 

https://www.equifax.com.au/personal/financial-hardship-common-questions-answered 

https://www.legislation.gov.au/C2024A00138/latest 

https://www.afca.org.au/news/supporting-2025-buy-now-pay-later-bnpl-reforms 

https://asic.gov.au/regulatory-resources/credit/debt-management-reforms-credit-licensing/ 

https://www.afsa.gov.au/newsroom/pir-newsletter-july-2024 

https://www.service.nsw.gov.au/transaction/find-a-no-interest-loans-scheme-nils-provider