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What’s A Good Credit Score?

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What’s A Good Credit Score?

What’s a good credit score, and how do you go about improving your credit score? You could be on the heels of an important financial decision at the moment. Perhaps you’re looking into a small loan to fund a long-held business idea or to supplement the tuition if your child is of school age. Maybe you’re a regular credit card user and want to bump up that plastic to a tier that can give you more benefits.

Whatever your reasons for asking, ‘What’s a good credit score?’ MONEYME is here to help. But before even thinking about credit score quality, what are credit scores, anyway? 

Well, banks and lending institutions attend to hundreds of thousands, even millions, of clients on a daily basis. And a good chunk of those clients seek a line of credit with them, whether that’s through a credit card or a loan product. So how do lenders discern which people to lend money to, how much money to lend them, and on what terms? More importantly, how do they decide which people get better or unfavourable terms?

Enter your credit score. This number can range from 0 to 1,000 or 0 to 1,200, depending on the credit reporting agency, and the figure is often an accurate depiction of your financial health and credit history. And to get access to credit, a good credit score in Australia is one of your greatest weapons in the world of personal finance.

So what’s a good credit score to start with if you want to increase your borrowing power? The answer is not so straightforward.

What credit score do I start with in Australia?

The Australian credit score you start with varies from situation to situation. For instance, if a lender or bank knows that you’ve just come of legal age and are applying for your first-ever credit card, they anticipate that you probably have no prior credit history, so they may not consider that a factor in your credit application. 

On the other hand, if your credit record reflects that you’ve bought a home in the past with a home loan, banks will probably assess your repayment history to see if you qualify for a new home loan. If that loan was completed without a history of defaulting or missed payments, then the odds are that your credit score will reflect those good borrowing habits, making it more likely that you can borrow money again.

There’s no magic number that every single borrower should strive to have. So what’s a good credit score? The answer is different for everyone. But you can’t raise your credit score without knowing what your baseline is, so you’ll want to find a way to get your credit scores for free.

How do I build a good credit score?

What’s a good credit score, and how do you get there? There are several ways to build a healthy credit score. First and foremost, you’ll want to pay any bills on time. Payment history is one of the most significant factors that can affect your credit score. Be sure to pay all your bills, including credit card bills, loans, and utilities, by their prescribed due dates.

You also want to make wise use of credit cards and loans. Only borrow what you can afford to repay. For credit cards, try to keep your credit utilisation ratio (the amount of credit you’re using when compared to your total credit limit) below thirty per cent for each credit card and overall.

Having a mix of credit types, such as credit cards, loans, and a mortgage, can also have a positive impact on your credit score. But avoid opening unnecessary accounts just for the purpose of raising your credit score.

Another thing you want to avoid is excessive credit applications. Applying for multiple credit accounts within a short period, whether or not those lines of credit are granted, can be seen as a red flag by lenders. A history of multiple hard credit checks in a short period of time would be seen on your credit report, and it can be an indication to lenders that you are overreliant on credit. Be selective and apply for credit only when necessary.

Finally, remember that getting good credit score ratings takes time. So if you’ve had a not-so-perfect credit history and are wondering, ‘What’s a good credit score, and do I still have a chance to attain it?’ it’s not the end of the world. 

By maintaining a record of good habits and on-time repayments, lenders will be able to see that your financial situation has changed compared to the rough patch you may have gone through in the past. Learn how to improve a credit score and be patient with the time it takes to see positive changes.

What are the benefits of having an excellent or good credit score?

Another question you may have other than ‘What’s a good credit score?’ is ‘What does a good credit score get me?’ 

First off, borrowers with better credit scores often get access to better interest rates. Because lenders consider credit scores when determining interest rates for loans and credit cards, a good credit score makes you more likely to qualify for loans and credit cards with lower interest rates, which will save you money over time.

Since it is a measure of your creditworthiness, a good credit score also increases your odds of being approved for credit, such as mortgages, auto loans, or personal loans. Due to the considerable amount of money needed to fund such purchases, lenders are usually more willing to lend to individuals with a strong credit history and good credit scores.

Also, when you have a good credit score, credit card issuers are more likely to offer you higher credit limits over time. This provides you with greater purchasing power and flexibility, plus the exclusive rewards and benefits – think cash back, freebies, and more – that those higher credit card tiers tend to come with. Similarly, some lenders may offer higher borrowing amounts.

Once every three months, you can request a free credit report from major credit reporting bodies such as illion, Equifax, and Experian. With their stored financial data about you, they are able to generate your credit report and calculate your credit score. 

But since you can only request credit reports from these agencies once every three months, you won’t be able to track your progress from month to month.

Here’s how to check your credit score without spending a cent, and it’s a much simpler solution. The MONEYME Credit Score tool makes it easy to find out your score — plus, it’s free, fast, and comes with tips on how you can improve your rating. 

All you have to do is download the MONEYME app for free. Tell us a few basic details about you, including your name, number, email address, date of birth, address, and optionally, your driver’s licence number, and we will handle the rest. 

The MONEYME Credit Score tool will give you access to the very same information that banks and lenders assess to determine your creditworthiness and get on top of your finances.

*Canstar’s Innovation Excellence Award 2022 was for MONEYME’s product Autopay. Credit scores are provided by Price Enquiry Pty Limited ACN 647 624 155.

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