Did you know that a high credit score doesn’t just improve your chances of being approved for a loan or credit card? It can also open the door to a range of other perks that aren’t available to those with a less than ideal credit score.
A high credit score is a good thing as it shows creditors you’re more likely to be able to pay your loans or credit cards on time. Essentially, this lowers the risk of the financial institution needing to chase up outstanding debt.
What you might not know is that a high credit score gives you much greater control over the credit you are offered. Here are our top six perks a high credit score will get you.
More chance of being approved
This one might seem like a no-brainer, but it’s worth including upfront. People with a low credit score are always at a greater risk of being knocked back when they apply for credit.
Whereas, having a high score (very good or excellent) can work in your favour as it shows you have a positive borrowing and repayment history.
Of course, it doesn’t mean you're sure to get approved. Other factors are considered when approving a loan or credit card. But it certainly does help.
Better interest rates
If you are looking to buy a property and have the income to service a loan, a lender is more likely to offer you an attractive rate for your loan if you have a good credit history.
You are viewed as being an ideal customer if they can see you have a high credit score and are diligent about paying your bills on time.
By simply knowing you have a high credit score you automatically have more negotiating power when it comes to rates, fees and closing costs.
Different lenders will be wanting your business, so it works for them to offer you a competitive rate.
Don’t be shy to use your high credit score as collateral when negotiating a deal.
In comparison, lower credit scores (below average, average, good) often mean that lenders are much less likely to be flexible in their loan terms.
Better access to premium rewards credit cards
Premium rewards credit cards are usually more accessible to those with high credit scores, bringing a range of sign up-bonus points, higher points earning rates, cash back offers and low introductory interest rates.
Being able to use a rewards credit card can unlock perks such as international Business Class flights, airport lounge access, discounts at your favourite restaurants, a range of insurance products, concierge services and much more.
This, of course, is only a perk if you do NOT overspend or don't carry a large credit card balance which you cannot repay at month end.
Increased credit card limits
The amount a lender will let you borrow increases greatly when you can show you are a responsible cardholder with a high credit score.
If you are deemed a good customer by a credit issuer that means you are more likely to be approved for a credit limit increase.
A higher credit limit allows for more financial flexibility and increased spending power when you need it.
Your ratio of credit available to credit used plays a role in calculating your credit score.
If you pay off your balance in full each month and raise your limit, you may see your score increase by a few more points.
But don’t get too carried away here. Only increase your limit to what you feel is reasonable for you to manage.
A greater choice of credit providers
A high credit score means that you can shop around for the best deal from different lenders.
You don’t necessarily need a high credit score in Australia to get a mortgage, but you’re more likely to need a larger deposit if your rating is not so good.
Use your high score to your advantage and shop around for the best option for you.
Lower financing rates on a car lease
If you are looking for a new car and are considering leasing instead of buying, your good credit score can work to your advantage when you are in negotiations.
Some dealers will offer you lower than average financing rates if you are seen to be a lower risk and therefore more likely to repay the loan on time.
If you can’t negotiate a lower financing rate, the dealer might be able to lower the car price instead.
It certainly can’t hurt to ask if you are empowered, which is why knowing your score is an asset you can use to your advantage.