Benefits of a Good Credit Score
Wondering what the benefits of a good credit score are in Australia? We explore 6 ways a good credit score can help you and how you can use it to make money.
- 6 benefits of a good credit score
- Lower interest rates
- Easier approval for loans and credit Cards
- More negotiating power
- More choice in lenders
- Get approved for higher limits
- Faster loan approval
- Easier rental or housing approval
- How to improve your credit score
6 benefits of a good credit score
Check out these 6 benefits of having a good credit score in Australia:
1. Lower interest rates
The main benefit of a good credit score is the lower interest rates. Good credit scores show lenders that you are a safe bet when it comes to lending money and that will be reflected in the lower interest rates.
2. Easier approval for loans and credit cards
Good credit scores demonstrate to the lender or bank that you are a responsible borrower. So a good credit score can make it easier for you to get approved for a loan or credit card.
3. More negotiating power
If you are applying for a larger personal loan then a good or great credit score may put you in a position to negotiate for larger amounts and better terms on your loan. You will also have more choice in what lender you would like to use, which means you can seek out the best loan deal for you.
4. Get approved for higher limits
Higher credit scores can help you be eligible to borrow larger sums of money. Although credit score isn’t the only factor used, it helps to add strength to your application.
5. Faster loan approval
Depending on the lender, a good credit score could help you get approved faster. If you have a less than ideal credit score, lenders may still try to find a solution that will work for your circumstances. But this can take more time as they gather more information about your financial situation and consider options. Whereas a straightforward credit file helps to clearly demonstrate good debt management.
6. Easier rental or housing approval
Landlords may apply to access part of your credit report (the Public Record Information) to assist with their decision on whether to lease you the property. While not every landlord will do this, it is something to keep in mind about the benefits of a good credit score in Australia.
How to improve your credit score
Improving your credit score takes time but there are some things you can do to help.
A few common ways people improve their credit score include:
- Making payments on time
- Limiting the number of credit applications
- Checking credit reports for inaccuracies
- Debt consolidation loans
Learn about how you can improve your credit score without a credit card.
Why is it important to get good credit?
Ultimately, good credit is about making it easier, cheaper, and faster to get finance when you need it. Unless you can afford to pay for everything upfront, it’s worth spending time building up a good credit history for when you need that extra money.
Why is it important to establish good credit at an early age?
Building a good credit history takes time, which is why starting at a young age is a good way to set yourself up for the future. Once you get to the point of wanting to take out finance for something big, like a personal loan or a home loan, you may find yourself in a bit of a difficult situation. While it’s not impossible to get a loan with a bad credit score, you likely won’t get as good of a rate.
What can I do with good credit to make money?
Your excellent credit score will mean you’re in a great position to get a good deal on your finances and make money in the future. Here are just a few ways people use a good credit score to make money.
- Home renovations: spend a bit of money to make some key improvements around the home and raise its resale value.
- Investment property: A good credit score puts you in a great position to take out an investment home loan.
- Finance a small business: If you’ve ever had a great business idea waiting in the back of your mind, it might be time to put that good credit score to use. You can apply for a small business loan or credit card and get a really good deal.
Is 800 a good credit score in Australia?
While each credit bureau uses slightly different number ranges in their credit reports, a credit score of 800 is generally considered excellent in Australia. A ‘good’ credit score is anything over 661 for Equifax, 625 for Experian, and 500 for Illion.