A good credit score means you are more likely to qualify for better credit cards with lifestyle perks and travel benefits such as lounge access and insurance.
How credit scores affect applications
The record of all of your credit activity (credit cards, loans, utility bills) is compiled together into a credit report which indicates your creditworthiness – the better you are at handling credit, the higher you score. It is this that helps lenders to responsibly approve applications.
As of 2014 Australia’s credit reporting system is a ‘comprehensive’ system which means your history of compliance and non-compliance are reported and brought into consideration. Part of the credit reporting process will be to look at your repayment history, which is great if you consistently pay your credit card on time but not so good if you don’t make payments on time.
Considerations before applying
- You'll be more likely to get approved for no-frills cards. It's harder to get approved for for a premium card, even with a high credit score.
- A good credit score isn't all you need. Even if you have a good or excellent score, you should still check the eligibility criteria since it's possible you may not meet all the requirements. For example, you may not have enough taxable income.
- Check your report before you apply. If you haven't done so already, check your credit report for any late or missed payments.