- What credit score you need for a credit card in Australia
- Other eligibility criteria to look out for and
- What your options are if your credit score is looking a bit lacklustre
Minimum credit score to apply for a credit card in Australia
We go through 'bad credit’ and 'good credit' plus what it means for your credit card application.
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Sometimes it can seem that getting a new credit card is as easy as picking up a new pair of shoes at the store.
You've got banks advertising all over the internet, friendly-looking salespeople at the shopping centres and attractive credit card offer that seem too good to be true.
What they don't tell you though, is that you might not get approved if your credit score is deemed to be too low. With different reporting bodies offering up multiple standards of measuring your credit score, things can get confusing. Luckily, we've got you covered in this guide.
Quick tips before you read:
Credit scores can range between 0 and 549 for a poor score and up to 800 and 1,200 for an excellent score. Lenders use this number and your credit report to assess your application when you apply for a credit card or loan.
What credit score do I need for a credit card?
Not all credit cards will have the same criteria when it comes to credit score. In general:
- Aim for a score that's above 'average' as the higher your score, the higher your chances of being approved so having score that's good to excellent is ideal.
- Credit scores range from 0 to 1,200 across the three main credit reporting agencies, Equifax, Experian and Illion.
Here is a breakdown of credit score grades for each credit reporting agency. Note that if you order your credit score and report from finder.com.au, this information is delivered by Experian.
Finder uses Experian's score ranges so an ideal minimum score would be a score of 550 and above.
|Weak / Below average||0-509||0-549||0-299|
|Fair / Average - aim for above this||510-621||550-624||300-499|
|Great / Very good||726-832||700-799||700-799|
|Excellent - this means more options||833-1,200||800-1,000||800-1,000|
A good credit score usually sits between 800 and 1,200. The exact bracket may vary depending on the credit reporting body you get your credit score from. For example, if you get your free credit score from finder it will be delivered from Experian and it will be a number between 0 and 1,000. However, Equifax's credit score system rates credit scores between 0 and 1,200.
What each range means for your application
- A high score opens the door to just about any credit card.
- Low credit scores can expect lower credit limits, high interest rates and even outright rejections if your score is considered too low.
- Just average? You might be in the clear. Generally speaking, credit card providers choose to lend to borrowers with a score ranked as average or higher.
Lenders know your credit score, so why shouldn't you?
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What's in this guide?
- Where's the line drawn between good and bad credit?
- What credit score do I need for a credit card?
- Credit score ranges from credit reporting agencies
- What each range means for your application
- There is no guarantee of approval
- What are the other eligibility requirements for a credit card?
- What are the options for a credit card with bad credit?
- How can I improve my credit score?
- How can I check my credit score?
- Lenders that offer personal loans to bad credit borrowers
There is no guarantee of approval
Saying all that, having an above average credit score is still no guarantee that you will be accepted. It's ultimately up to your financial institution as to whether they approve your application or not but having a decent credit score is certainly a good place to start.
A good example of this is when you're applying for a platinum-style credit card which can be considered more exclusive. These are often difficult to obtain even for those with above average credit scores as banks tend to look for a long period of good credit history.
Your credit score is not set in stone either, which means you can expect it to go up and down over time based on your financial behaviour. A big enough blip in your credit report can make an impact on your credit score and make you less attractive to credit card providers. A late payment, holding too much debt and even a previous credit card rejection can all bring your score down.
What are the other eligibility requirements for a credit card?
In most cases, you can apply for a credit card if you're 18 or older, have a good credit history and meet any specific eligibility criteria set out by your financial institution. Some of these can include:
- Valid Australian residency status. You need to either be an Australian citizen, permanent resident or hold a valid visa if you're a temporary resident.
- Minimum income. An income requirement can range from $15,000 to $80,000 and even higher. This is to ensure that you have enough income to pay off the card you're applying for.
- Not bankrupt. This will be likely reflected in your credit score but some financial institutions will specify that you can't have been declared bankrupt.
What are the options for a credit card with bad credit?
Credit score not looking so crash hot? The good news is, you do still have some options. While you might not have your pick of credit card or be able to choose your credit limit, there are still credit card options for applicants with bad credit.
Some options you can consider include:
- Low limit credit cards. A card with a low minimum credit limit reduces the risk to the lender meaning you have a greater chance of being approved.
- Debit cards. Debt-proof and as widely accepted as payment as credit cards, a debit card could be a suitable replacement.
- Prepaid credit cards. Similar to a debit card, prepaid cards need to have funds loaded on to them before using it.
- Short term loans. Also known as payday loans, short term loans are generally borrowed on terms between 16 days and 1 year. These loans do come at a high cost in terms of fees and interest so you really should put in considerable thought before applying.
You can also have a chat with your current financial institutions if you are having trouble getting approval. You already have a history with them and they should have a good sense of your financial position so may be more willing to lend compared with a lender with whom you have no history.
How can I improve my credit score?
If you have a credit score below the "good" threshold, here are some ways you can improve your score:
- Consolidate your debts. If you're struggling to pay off multiple debts, you can consolidate them into one account. For example, you could consolidate several credit card debts onto one card with 0% on balance transfers and pay it off with no interest for a promotional interest. You can also compare personal loans that are designed for debt consolidation. Not only are your debts easier to manage because they're under one account, you should save on interest costs by choosing a card or option with a low interest rate.
- Make payments on time. The last two years of your repayment history is now listed on your credit report, so it's important to make your repayments on time. If you are late with one or two repayments just make sure you keep up with all of your following repayments.
- Establish healthy accounts. If you don't have a credit card or loan, you can also demonstrate positive repayment behaviours by paying accounts such as your mobile plan, internet plan, electricity account on time.
- Lower your credit limits. The credit limits of your open credit accounts are listed on your report, but not how much debt you have. So if you have three credit cards with high limits but only a bit of debt, it still may have a negative effect on your score. Reduce your unused limit for an easy credit score win. However, keep in mind that lowering your credit score can will impact your credit utilisation ratio and could hurt your credit score if you have a high debt to credit limit ratio. You can weigh up the pros and cons of reducing your credit limits in this guide.
- Demonstrating job stability. A steady income (such as staying in the same job for a few years) demonstrates responsibility and your ability to repay to lenders.
- Rental and home ownership. Long-term rental or homeownership can also shows lenders that you are capable of making regular repayments and can manage other loans.
- Don't make too many credit card applications. Each credit application you make shows up on your credit report regardless of whether it is approved. Having numerous credit applications on your report in a short space of time will have a negative effect on your credit score. If your credit card application is rejected, you should avoid applying for another one until you've had time to improve your credit score and ensure you're eligible for the card.
How can I check my credit score?
You can order a copy of your credit report through a credit reporting bureau or for free through Finder. Follow the link below to sign up and get yours today.
Get your free credit score and credit report
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