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How your credit card affects your credit score

Your credit card doesn’t just help you access funds when you need – it also informs your credit score, giving credit agencies an insight into the way you use credit. Your credit score can in turn affect the way organisations assess your financial standing later on, when you apply for personal loans, home loans and more.

  1. What exactly is a credit score?
  2. Why is a good credit score important?
  3. How is your credit score calculated?

What exactly is a credit score?

In Australia, anyone who has a loan of some sort has a credit score, based on information about the way they manage credit cards, loans and other debts. Your credit card may only be part of the equation, but it’s still a good idea to learn how your card use could affect your overall score.

Why is a good credit score important?

When considering whether to lend you money – for a car, a home or something else – banks and other organisations want to know that you’re responsible with credit and won’t present a risk. For this reason, they’ll look into your credit score as one factor when deciding to approve your loan or not. That’s why it’s important to make sure your credit score is as favourable as possible.

How is your credit score calculated?

When it comes to your credit card, the kind of activity that affects your credit score includes your:

  • payment habits: your ability to make repayments on time and consistently pay your debt down will be reflected in your credit score.
  • credit card balance: having a low balance compared to your card’s limit is good for your credit score, as it implies you use credit responsibly. On the other hand, if you make it a habit to max out your credit card, your credit score could suffer.
  • account history: credit agencies will look at the way you manage credit for the whole life of your account, so it helps to maintain good credit behaviours over time.
  • other types of credit: as well as your credit card, your credit score is affected by any other loans you have such as personal loans, car loans and home loans. Being able to demonstrate you manage other debts responsibly could help your credit score.

Your credit score doesn’t always stay the same, but can change over time depending on your behaviour. So even if you’ve been a little less than diligent with debt in the past, it’s never too late to try and improve your habits… and your score.


Things you should know

Credit criteria, fees and charges apply. Offers are not available in conjunction with any special offers that are not listed on Switches, upgrades or customers accessing employee benefits are ineligible. Offers may be withdrawn or extended at any time. This information does not take into account your personal circumstances and is general in nature. It is intended as an overview only and it should not be considered a comprehensive statement on any matter or relied upon as such


© 2016 Westpac Banking Corporation ABN 33 007 457 141 AFSL and Australian credit licence 233714. The Westpac Group, 275 Kent Street, Sydney, NSW 2000, AUSTRALIA.