Moving to Australia is both exciting and challenging. Among the many tasks new immigrants face, establishing a good credit history is crucial for financial stability and opportunities.
Understanding how the credit system works in Australia can be the key to securing loans, getting the best interest rates, and even renting a home.
We spoke to Bill Ryan Natividad, the Head of Operations at the Australian credit card comparison website Credit Card Compare, about credit-building for new immigrants living in Australia.
“Building a solid credit history is fundamental for anyone new to Australia,” says Natividad. “Your credit score opens doors to financial opportunities and helps integrate into the economic fabric of the country.”
Here are some of Natividad’s practical tips for new immigrants looking to build their credit in Australia.
1. Open a Bank Account
The first step is to open a bank account with a reputable bank. This will not only provide a place to deposit your money but also start your financial footprint in Australia.
Banks like Commonwealth Bank, Westpac, ANZ, and NAB offer accounts specifically designed for new arrivals.
2. Get on the Electoral Roll
Getting on the electoral roll is another way to build your credit history. It helps in confirming your identity and address, which is beneficial for credit checks. Even if you are not eligible to vote, registering your details can still be advantageous.
3. Pay Your Bills on Time
Ensure that all your bills—utilities, mobile phone, internet—are paid on time. Timely payments are reported to credit bureaus and contribute to your credit score. Set up direct debits or reminders to avoid missing any payments.
4. Monitor Your Credit Report
Regularly check your credit report to ensure all information is accurate and up to date.
You can get a free copy of your credit report from agencies like Equifax, Experian, or Illion once a year.
Monitoring your report can also help you spot any errors or fraudulent activities early.
5. Consider a Small Loan / Line of Credit
If you are comfortable managing debt, consider taking out a small personal loan. Repaying this loan on time will contribute positively to your credit history.
Bill Ryan Natividad notes, “Responsible borrowing and consistent repayments are key indicators of creditworthiness to lenders.”
A mobile phone contract is an example of a small line of credit you may be able to get.
6. Apply for a Starter Credit Card
Applying for a credit card can be a significant step in building your credit history.
If you have no or limited credit history in Australia, consider starting with a low-limit or no-frills basic credit card.
“If you are approved, using a credit card responsibly by making timely payments can quickly establish a positive credit record,” said Natividad.
7. Avoid Applying for Too Much Credit
Be cautious about applying for multiple credit products in a short period since each application results in a hard enquiry on your credit report.
Too many applications in a short period of time can be interpreted by lenders as a negative signal, which can negatively impact your credit score and make it more likely to be declined.
Conclusion
Unfortunately, your credit score doesn’t travel with you and building credit as a new immigrant in Australia takes time. However, it’s entirely achievable — millions have done it before — with careful planning and responsible financial behaviour.
For more information about building credit and getting your first credit card, visit creditcardcompare.com.au