A credit score is a number that represents your reputation as a borrower and how trustworthy you may seem to lenders. If you have a high credit score, are there ways you could make the most of it?
If you’ve recently checked your credit score and discovered you have a ‘good’, ‘very good’ or even ‘excellent’ one, then you might be thinking about how you can put it to use.
Having a high credit score can help when applying for a credit card or loan, for example, as it can demonstrate to lenders that you have a positive track record of meeting your financial obligations. But it can be an advantage in other situations too, so here’s a guide to what you could be able to do with a high credit score, and steps you may be able to take to improve your score if it’s not as high as you would like.
In Australia, your credit score is usually positioned somewhere on a scale between 0 and 1,200, or between 0 and 1,000 depending on the credit reporting agency you use to check your credit score. For example, one of the biggest providers, Equifax (formerly known as Veda), says a ‘good’ credit score is one between 661-734. Here’s how Equifax determines whether your credit score is ‘excellent’, ‘very good’, ‘good’, ‘average’ or ‘below average’, based on its credit score bands.
Excellent | 853-1200 |
---|---|
Very good | 735-852 |
Good | 661-734 |
Average | 460-660 |
Below average | 0-459 |
Source: Equifax
Having a high credit score could potentially help put you in a strong financial position in a number of ways, such as:
With a high credit score, you may find you have more power to negotiate a better interest rate on your home, car, or personal loan than you would if you had a lower credit score. There is no guarantee a high credit score will equal a better rate as it’s only one factor lenders consider, but it could be one tactic worth thinking about.
Banks and lenders may be willing to let you borrow more money if you have a high credit score, because you have demonstrated an ability to meet your repayments on time in the past. While it may be useful to be able to borrow greater amounts depending on your plans, it’s also important to consider whether you would be able to meet the increased repayments without placing strain on your finances.
While lenders may take a number of factors into consideration before approving a credit card or loan application, your credit score will generally be an influential one. That being said, having a good credit score doesn’t necessarily guarantee loan approval – factors such as the amount of credit you’re applying for and your current financial situation, including any existing loans you have, could also help determine the outcome of your application.
Even if your credit score is already high, it’s possible there could still be some room to improve on it. Here are a few steps to consider that could help put you in a stronger position:
This article was reviewed by our Sub Editor Tom Letts and Editor-in-Chief Nina Tovey before it was updated, as part of our fact-checking process.
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