Guest Blog by Bessie Hassan | Money Expert at finder.com.au

A good credit score could be the difference between securing your family home, being able to take out a line of credit to cover an emergency expense, or pocketing thousands of dollars over the life of your mortgage by getting a discounted rate. If you don’t start allocating time and energy to improve your financial position and your credit score, then you’re shooting yourself in the foot.

A new survey from finder.com.au asked over 2,000 Aussies what they thought of their credit score and found that 25% of Aussies fear they’ll be rejected for a loan or credit card because of their poor credit score. That’s 1 in 4 of us. Despite this, the majority of us - 82% - have never tried to improve their credit score, while 20% don’t know how.

This suggests there is a gap when it comes to financial literacy around credit scores, and this is something we need to actively change. We need to be smarter when it comes to our credit score because unfortunately we’re at the mercy of the lender or provider; if they don’t think our credit score is up to scratch, then they’ll decline our application.

If we break it down to a demographic level, Millennials (34%) are the most likely to do something about correcting their credit score compared to just 17% of Gen X and 10% of Baby Boomers.

Your credit score is typically a number from 0 to 1,200 that tells a lender what kind of borrower you are. The higher your number, the better your credit position. It’s free to check your credit score so why not jump online and find out what your number is?

Here are 5 easy ways to enhance your financial position:

• Be a responsible borrower. You may think that having no credit history will be preferable over having a credit history, but this is not the case. Lenders need evidence that you’re capable of repaying a loan so if you’ve got a proven track record of meeting your repayments on time, the lender will see that you’re a responsible borrower. Whether it’s a credit card or mortgage repayment, make a conscious effort to service your debt according to the terms outlined by your lender.

• Avoid negative listings. Listings that raise a red flag to the lender include high credit card limits, several loan accounts, and things such as defaults or bankruptcies. Do your best to avoid falling into this category of negative or high-risk listings by only taking on debt that you can comfortably manage and repay.

• Change your financial habits. After checking your credit score, you may decide you need to adjust some of your financial habits to improve your number. For example, if you have a high credit card limit you may want to consider lowering it.

• Consolidate debt. If you have several loan accounts and you’re struggling to service the debt, consider consolidating your debt into one manageable repayment. This may help you save on multiple account fees.

• Be selective with credit applications. Each time you apply for credit, the provider will make an enquiry on your credit file. If you apply for several loans in a short period of time, a lender may think that you’ve been rejected for other financial products which could make them skeptical about lending to you. Only apply for finance if you’re confident that you’ll be approved and if you find that you are rejected for finance, then consider evaluating your financial position before re-applying.

Your credit score has a huge bearing on your ability to access competitive and favourable financial products and it will ultimately influence your quality of life and your financial liberty. Take it upon yourself to access your credit score, to understand it, and to improve on it where feasible. This will allow you to benefit from the range of competitive and useful products that are available in the marketplace to help you realise your goals, whatever they may be.