Understand what impacts your credit score

Here are answers to some common questions around the things that can impact your credit score:

When does my credit history start?

Your credit history starts with your first credit enquiry. This usually happens when you apply for an account and give consent for a credit check. It could be for a credit card, a utility account in your name, or even a mobile phone plan.

How does having a personal loan impact my credit score?

Applying for any type of credit—whether it’s a personal loan, mortgage, or credit card—typically results in a credit check, which may negatively impact your credit score in the short term.

However, a law that came into effect on 1 October 2019 allows lenders like Harmoney to make a quotation enquiry on your credit file. This means we can give you a quote on loan terms before you complete a full application. A quotation enquiry will be recorded in your file but won’t be used by credit bureaus to assess your score. A credit check will only impact your score if you decide to proceed with the application.

Managing a personal loan well—by making full, on-time payments—can actually help improve your credit score over time, as it shows good financial behaviour. A debt consolidation loan can also be beneficial if it helps you pay off multiple outstanding debts more efficiently.

However, loans can negatively affect your credit score if:

• You miss payments

• You default on the loan

• You apply for too many credit products in a short period

But I have a mortgage-free house and cash in the bank. Why is my credit score low?

Simply put, it may be because you don’t have much active credit to score. Your credit score is partially based on your credit utilisation ratio—the amount of credit you use compared to how much is available to you.

Additionally:

• Repayment history disappears from your credit file after 24 months

• Credit enquiries drop off after five years

So even a well-established credit history can fade over time. One solution could be to keep a line of credit open—even if you don’t use it—so your file continues to show activity.

I can’t afford a house! Do my rent payments impact my credit score?

Unfortunately, rent isn’t considered credit, so it doesn’t directly affect your credit score. However, many lenders will review your rental payment history when assessing your application—so it's a good idea to ensure those payments are easy to identify in your banking history.

Does changing my address make a difference?

Yes and no. Moving house by itself doesn’t affect your score, but where you live can. Credit bureaus sometimes take statistical data into account—meaning some suburbs, towns, or regions may be rated as higher or lower risk based on the financial behaviour of residents in that area.

Also, frequently changing addresses might cause some lenders to view you less favourably, as it could be seen as an attempt to avoid unpaid bills.

What you can control is ensuring all your service providers and financial institutions are updated with your new address. This helps credit bureaus build an accurate profile and ensures your financial history is traceable.

I’m shopping around for the best electricity deal. Does that hurt my score?

It can. While you may just be chasing the best deal, each time you sign up with a new provider, a credit check is made. Each check is recorded on your credit file and can affect your score.

That doesn’t mean you shouldn’t switch—it’s just worth being mindful of how often you do it. You might also try negotiating with your current provider, using a competitor’s offer as leverage.