Strengthening Your Credit Score: Why It Matters for SMSF Investors

BY GUEST EXPERT DANIEL WALKER | Director & Co-Founder of Bon Voyage Credit Repair

(Guest industry expert contributions are educational in nature and do not constitute advice. Contributor participation does not imply endorsement or preferred referral status.)

Your credit score is more than just a number. It reflects your financial reliability and is used by lenders to assess the risk of lending to you. A strong credit score can influence not only your ability to access finance, but also the interest rates and loan terms you may be offered.

For investors seeking to borrow under a Limited Recourse Borrowing Arrangement (LRBA) through a Self-Managed Super Fund (SMSF), a solid credit profile is particularly important. Whether you aim to purchase property, diversify your investments, or refinance existing loans, lenders will assess your SMSF’s financial position, and often your personal credit history if you act as a guarantor.

Common Credit Score Issues

Several factors can negatively impact your credit file:

• Credit Defaults: Occur when payments are missed and remain on your credit report for 5 years, even after repayment.

  
  

• Credit Enquiries: Every finance application triggers an enquiry, recorded for 5 years regardless of whether finance is approved, rejected, or paid out at a later date.

  
  

• Late Repayments: Payments on credit cards, personal loans, or other financial agreements that are more than 14 days late are recorded for 2 years.

  
  

• Court Judgments: Defaults resulting from legal action remain on the report for 5 years.

  
  

• Even a single negative listing can lower your credit score, potentially affecting your ability to access SMSF finance or secure competitive loan terms.

Protecting and Improving Your Credit Score

There are steps you can take to protect your credit profile:

• Pay on time: Prioritise debt repayment. If circumstances make this difficult, communicating with creditors can sometimes result in alternative arrangements.

  
  

• Be selective with lenders: Avoid payday lenders or “no credit check” finance, as multiple enquiries can damage your score. The more enquiries from these lenders, the more severe the damage to your credit score.

  
  

• Use a finance broker: A professional can structure applications efficiently and reduce unnecessary credit enquiries.

  
  

• Monitor your credit report: Equifax is the leading credit report company in Australia. Subscribing to Equifax allows you to track your report and receive alerts when it is accessed. You can obtain a free personal credit report at or pay a small monthly fee for their services at www.mycreditfile.com.au

How Credit Repair Specialists Can Assist

Credit repair specialists work to identify, dispute, or negotiate negative listings on your credit report, helping improve your score and access to finance.

Case Study 1:

A client of ours with a credit score of 456 had three defaults. After negotiation, two defaults were removed without payment, and the third $12,000 default was settled for $7,000 and also removed. Once these defaults were removed, their score rose to over 800, enabling them to move on with their life, and access finance if they wanted.

Case Study 2:

Another client we helped had eight months of late credit card repayments, leaving them without a credit score. Equifax was not able to generate a credit score at all. Following our intervention with the creditor, all months were updated to “paid on time,” restoring their score to 985 (which is a very strong score). This allowed them to re-enter the prime lending space, which means that they are able to obtain outstanding lending rates and terms.

Why It Matters for SMSF Investors

For SMSF trustees, maintaining a strong personal credit score is a crucial, yet sometimes overlooked, consideration when seeking financing. By protecting or repairing your credit, you can access better loan terms, lower interest rates, and greater flexibility, thus supporting the growth and efficiency of your SMSF.

A strong credit score is not only a personal advantage. it can be an SMSF advantage, unlocking better borrowing terms and opportunities and potential savings.

Your credit score is more than just a number. It reflects your financial reliability and is used by lenders to assess the risk of lending to you. A strong credit score can influence not only your ability to access finance, but also the interest rates and loan terms you may be offered.

ABOUT THE AUTHOR:

Daniel Walker contributes industry perspectives on credit and finance considerations for SMSFs and property investment. He has over 15 years of experience across credit repair, credit management and is a co-founder of a credit management company. His commentary is for educational purposes and does not constitute personal advice. Explore your SMSF options >

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DISCLAIMER:  Guest Industry Expert contributions are educational in nature and do not constitute advice. Contributor participation does not imply endorsement or preferred referral status. The views and opinions expressed in this article are those of the guest expert and do not necessarily reflect the views of the SMSF Intelligence team, its publisher, owners or its representatives and partners. No guarantee is given as to the accuracy, completeness, or timeliness of the content, and we do not accept any liability for loss or damage arising from reliance on the information contained in this article or any linked materials. This article is published for general information and educational purposes only and should not be considered financial, legal, tax, or investment advice. It has been prepared without taking into account your personal objectives, financial situation, or needs. Before making any decisions based on this content, you should consider its appropriateness in light of your circumstances and seek advice from a qualified professional. We do not provide financial, taxation, or legal advice.