Are credit checks mandatory?
In Australia it is impossible to get a credit card without the provider performing a credit check first. This is for your benefit, as it helps to prevent you from falling into avoidable debt.
A credit card is a payment method which lets you pay for goods and services without using your own money. It’s essentially a short-term loan which lets you borrow the bank’s money to pay for things which you can pay back – potentially with interest – at a later date. Credit cards can also be used to withdraw money from an ATM, which is known as a cash advance. Because you’re borrowing money from a bank, credit cards charge you interest on the money you use (unless you repay the entire debt during the interest-free period). When you apply for a credit card, the bank gives you a credit limit which sets the maximum amount you can borrow using your card. Credit cards are one of the most popular methods of payments and can be a convenient way of paying for goods and services in store, online and all around the globe.
There are two reasons you should check your credit rating: so you have a better understanding of your financial position, and so you can take action (if necessary) to improve your credit rating.
Lenders often use credit ratings or credit scores to assess loan applications. The higher your score, the more likely you are to get approved – and the more likely you are to be charged lower interest rates and lower fees. Conversely, the lower your credit score, the less likely you are to get approved – and the more likely you are to be charged higher interest rates and higher fees.
If you discover you have a substandard credit rating, there are nine steps you can take to improve it. Those steps include consolidating multiple debts, fixing errors on your credit file, making repayments on time, paying off loans and closing extra credit cards.
Credit cards are a personal responsibility, so the reasons behind getting a credit card should also be personal.
You should always consider all the pros and cons of taking out a credit card before you sign on the dotted line.
For example, pros include the fact that credit cards can be a good way of paying for purchases, earning rewards points and building a credit history.
But there are also cons – credit cards can be expensive and put a lot of financial pressure on you.
You need to consider your personal finances and your lifestyle choices. Do you need a credit card? What options are out there for me? Can I handle the repayments? Why am I getting a credit card in the first place?
Credit cards can be useful, provided you understand the risks. If you’re wondering about how to make a credit card online application, here are some steps to follow:
- Test the market – Many credit card options are available online. Compare providers by fees, interest and perks to ensure you’re getting the best deal.
- Complete the application – Once you’ve selected a card, head to the provider’s website and complete the online credit card application form. Forms vary by providers.
- Provide details – Most cards require you to meet age, residency, income and credit status condition, and you need to provide details like a bank account statement to prove this.
- Review details – Ensure the information you’ve entered is correct.
Pensioners can get credit cards with certain banks – if they can convince the bank they’re credit-worthy. Here are some points to consider if you are a pensioner looking for a credit card:
Annual income: Look for a credit card for which you easily fall within the minimum annual income requirements. This can be from the pension, superannuation or any other sources.
Annual fees: If high fees are a concern for you, opt for a card with a low or $0 annual fee. You want to make it as easy as possible to fit a credit card into your current lifestyle and spending habits.
Interest rate: Make sure you won’t have any nasty surprises on your credit card bill. Choose a card with a low interest rate to minimise risk (to both yourself and the bank – and this will help your application).