The Importance of Good Credit history

When you are looking for a new job, the first thing on your mind is likely to be how much it pays. But there are other factors that can make or break your paycheck including your credit history. With interest rates rising on a monthly basis and banks tightening their lending standards, people are starting to realise the importance of good credit history.

Not only does it increase your chances of loan approval as lenders view a positive credit history as an indicator of responsible financial behaviour, but it also enables you to negotiate better loan terms, including lower interest rates, which can result in substantial cost savings over time. Below we’re going to be going through the essentials when it comes to building good credit and of course, maintaining it. 

A credit report is one of the most critical pieces of information that you need to know. It tells you how much debt you have if any, and what your score is. According to, lenders use your credit score to decide whether to lend you money or not (Credit scores and credit reports, 2021). The credit report also shows where all your bills are being paid so that people can see what they owe. The importance of a good credit score cannot be understated because it influences everything from getting a home or car loan to applying for a job. A bad credit score could mean the difference between living in poverty or having enough money to survive. 

Building a good credit history is essential for any of us. It is something you should be aware of, and it will take time, but with the right strategy and patience. Having excellent credit can help save money on interest rates, give you access to lower auto insurance premiums or better deals on home insurance rates. You might even have more options when applying for loans.

The credit score you have can make a big difference in the quality of life you live. If your credit score is poor, you will find yourself paying more for things like car insurance and mortgage rates, while if your credit score is good, you will enjoy cheaper rates on these items. There are some simple ways in which you can do this to help improve your credit score. The following blog post provides tips to build up your credit score to reflect positively on your lifestyle choices over time. Building a good credit history is one of the most important financial decisions you will make. It is not hard to get started, but some steps can help you do it right from the start and protect your finances for years to come. 

When it comes to building a good credit history, there are some things you need to know. For example, the three significant factors that determine your credit score are payment history, debt-to-income ratio and length of credit history. The first two factors have a lot to do with how responsible you have been when it comes time to pay back the money or take out loans–have you always paid on time? Have you taken out too many loans at once? And the last factor is about how long your account has been open–has it been opened for years or just months?

Building a good credit history is essential to being financially successful and building a solid foundation for your future financial life. A strong credit score can lead to better financial opportunities for you, such as getting approved for loans or even buying your own home someday. A study by the University of Sydney Business School partnered with illion showed that having good repayment history information and account holding information will enhance the borrower’s credit report (Grant).

Here are some quick tips on building a solid credit history and maintaining it in the future:

  • Apply for any loan that will help establish the use of borrowed funds responsibly. This includes applying for student loans, car loans, mortgages etc.
  • Pay off all debts on time. This means paying bills like rent and utilities before they’re due
  • Avoid debt traps such as Buy Now, Pay Later services as they can be a quick way to fall into debt and lenders take these accounts into consideration when you apply for a loan. 
  • The same goes for having a credit card, this can be a great way to initially build your credit score, particularly if you have one and don’t use it or you pay everything back on time. Use your card responsibly by only charging what you know you can pay back at the end of each month; Limit yourself from opening credit accounts. Again, keep in mind that when you apply for a loan, whatever your credit card limit is, is likely to be deducted from the loan amount. 

Good credit is crucial in modern society and it greatly affects whether or not you’ll be approved for a loan. It’s much like how you can qualify for cheaper auto insurance rates if you have an excellent driving record, another benefit of maintaining a solid credit score. Building up your credit history takes time, but it is not impossible with the right strategy in place. 

Banks are tightening their lending standards and amounts with rising interest rates, which means your credit history is going to have a massive impact on not only getting approved for a loan but the amount you’ll be able to borrow as well. 

DISCLAIMER: The contents of this newsletter are intended as general advice only. No specific person’s circumstances, financial situation or objectives have been taken into consideration. You should not act on the information provided without seeking personal advice from an appropriately qualified financial planner. 


Credit scores and credit reports. (2021).  Moneysmart.

Grant, A. Who has benefited from the introduction of positive credit reporting in Australia?