Home loans: Credit check

Your credit history affects your home loan application. But there are options available if you have a bad credit history.

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Lenders need to see proof that you have a good credit history so they know you can pay back the money you borrow from them. Your credit history could be the difference between getting a home loan and getting rejected. You can order your credit report for free today by clicking the link below, or read on to learn how you can improve your credit score or find alternative finance options as a bad credit borrowers.

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How does your credit affect your ability to access home loans?

When you apply for a home loan, banks and lenders check your credit file before you can get approved. Your credit file acts as a representation of your credit history and can include: unpaid bills, getting declined from a loan, late payments, if you have applied too often or if you have declared bankruptcy.

The lender will check your credit file and if you do have any negative marks, your options will be limited. All your past dealings with borrowed money are collected and is used as an indication of your future ability to make repayments.

Improving your chances of being approved for a home loan

There are a few different ways that can help you improve your credit file and chances of being approved for a home loan:

  • Regularly check your credit file. Doing this will ensure that banks or lenders don’t incorrectly place negative listings on your file. It’s also an important step in safeguarding yourself against identity theft. Checking your credit file will ensure there’s no errors and if there is something wrong, fixing the errors will improve your chances of being approved for credit.
  • Pay bills on time. Ensuring you pay your bills on time is one of the most simple ways to improve your credit rating and keep your file clean. You will also look like a responsible borrower to potential lenders.
  • Consider debt consolidation. Debt consolidation is when you consolidate all your debts into one. It will make your repayments easier, as you will only have the one to worry about, and you can significantly reduce your interest. Getting in control of your debt can assist you in improving your credit history.
  • Refinance. You may also want to consider refinancing. Making the switch may help you better manage your debt or find a more suitable home loan for you. You shouldn’t rely on refinancing as a way to get you out of trouble, however, it could potentially improve your chances of success when applying for a home loan.
  • Don’t apply for too many loans. Applying for loans too often and being unsuccessful can hurt your credit rating. Making too many enquiries will raise red flags to lenders as it may indicate that you are irresponsible.

Read our full guide to credit scores and mortgage applications

What are your home loan options if you have bad credit?

Fortunately, even if you do have a bad credit history, there are still some options available to assist you in successfully getting a home loan.

  • Non-conforming lenders. A non-conforming lender will go outside a regular lender’s financial guidelines. This means, they may have different requirements compared to normal lender’s home loans. While these loans are an option for people with bad credit, they come with a few key differences. Loans from non-conforming lenders tend to be risky for the lender, this is why they often charge higher fees and rates to cover themselves.
  • Wait for negative marks to be removed from credit file. Another option you have is to wait for negative marks to be removed. Your credit history doesn’t stay on file forever. In most cases, your credit file usually goes back to how it was within five years. If you are able to wait for negative marks to be removed, this can significantly help you when applying for home loans.
  • Credit repair. Credit repair is the process of an agency refuting any incorrect listings on your file. If successful, you can have these errors removed from your credit history which, in turn, leads to a clean credit file. Keep in mind that this is an expensive process and there is no guarantee that listings can be removed, so be wary of any credit repair agency that claims they will be able to do this.

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Credit services for Aussie Select, Aussie Activate and Aussie Elevate products are provided by AHL Investments Pty Ltd ACN 105 265 861 (“Aussie”) and its appointed credit representatives, Australian Credit Licence 246786. Credit for Aussie Select products is provided by Residential Mortgage Group Pty Ltd ACN 152 378 133, Australian Credit Licence 414133 (“RMG”). RMG is a wholly-owned subsidiary of the Commonwealth Bank of Australia ABN 48 123 123 124 AFSL and Australian Credit Licence 234945. Credit for Aussie Activate products is provided by Pepper Finance Corporation Limited ACN 094 317 647 (“Pepper”). Pepper Group Limited ACN 094 317 665, Australian Credit Licence 286655 acts on behalf of Pepper. Credit services for Aussie Elevate products are provided by AHL Investments Pty Ltd ACN 105 265 861 Australian Credit Licence 246786 (“Aussie”) and its appointed credit representatives. Aussie is a trade mark of AHL Investments Pty Ltd ABN 27 105 265 861. Credit and any applicable offset accounts for Aussie Elevate are issued by Bendigo and Adelaide Bank Limited ABN 11 068 049 178 AFSL / Australian Credit Licence 237879.

Aussie is a trade mark of AHL Investments Pty Ltd. Aussie is a subsidiary of the Commonwealth Bank of Australia ABN 48 123 123 124. ©2019 AHL Investments Pty Ltd ABN 27 105 265 861 Australian Credit Licence 246786.

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Rates last updated December 16th, 2019
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Name Product Interest Rate (p.a.) Comp Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment Short Description
St.George Basic Home Loan - LVR 60% to 80% (Owner Occupier, P&I)
2.99%
3.01%
$500 (waived for loans above $150,000)
$0 p.a.
80%
Online only cashback offer: Refinancers borrowing $250,000 or more can get a $4,000 cashback for their first application (Other terms, conditions and exclusions apply). Buyers and refinancers can get this competitive variable interest rate. Application fee waived for loans above $150,000.

UBank UHomeLoan Variable Rate - Discount offer for Owner Occupiers, P&I Borrowing over $200,000
2.84%
2.84%
$0
$0 p.a.
80%
Enjoy flexible repayments, a redraw facility and the ability to split your loan. Plus, pay no application or ongoing fees.
Suncorp Back to Basics Home Loan - Better Together Special Offer $150k+ LVR<=90% Incl. LMI (Owner Occupier, P&I)
3.03%
3.04%
$0
$0 p.a.
90%
Get one free online redraw per month and pay no ongoing fees. Application fees are waived for loans above $150,000.
loans.com.au Smart Home Loan - (Owner Occupier, P&I)
2.88%
2.90%
$0
$0 p.a.
80%
Get one of the lowest variable interest rates on the market and pay 0 application or ongoing fees.
Tic:Toc Live in 10% deposit Variable Rate - Principal & Interest
2.79%
2.80%
$0
$0 p.a.
90%
Get a very low interest rate and pay no application, settlement or valuation fees. Apply online for full approval in real time and add a 100% offset account for $10 a month.
Virgin Reward Me Fixed Rate Home Loan - 2 Year LVR < 90 (Owner Occupier, P&I)
3.44%
3.39%
$0
$10 monthly ($120 p.a.)
90%
Enjoy a competitive fixed rate with no application fee.
Bank of Melbourne Basic Home Loan - LVR above 60% up to 80% (Owner Occupiers, P&I)
2.99%
3.01%
$500 (waived for loans above $150,000)
$0 p.a.
80%
Online cashback offer: Refinancers borrowing $250,000 or more can get a $4,000 cashback for their first application (Other terms, conditions and exclusions apply). A low variable interest rate for home buyers and refinancers. Application fee waived for loans above $150,000.
Tic:Toc Live in Loan Fixed Rate Home Loan - 3 Year (Owner Occupier, P&I)
2.84%
2.92%
$0
$0 p.a.
90%
Apply online and get fast approval for this fixed rate, low-fee loan with redraw facilities. Add a 100% offset account for $10 a month.
State Custodians Low Rate Home Loan with Offset - LVR up to 80% (Owner Occupier, P&I)
2.90%
2.92%
$0
$0 p.a.
80%
This loan offers a competitive variable rate and a 100% offset account to help save you on interest repayments.
Bankwest Complete Home Loan Package Variable - $200k+ LVR <=80% (Owner Occupier, P&I)
3.05%
3.50%
$0
$395 p.a.
80%
A low variable rate loan with a 100% offset account and package discounts.
Tic:Toc Live in Loan Fixed Rate Home Loan - 1 Year (Owner Occupier, P&I)
2.84%
2.94%
$0
$0 p.a.
90%
Apply online and get fast approval for this fixed rate, low-fee loan with redraw facilities. Add a 100% offset account for $10 a month.
BankSA Basic Home Loan - Promotional Rate (Owner Occupier, P&I)
2.99%
3.01%
$500 (waived for loans above $150,000)
$0 p.a.
80%
Online only cashback offer: Refinancers borrowing $200,000 or more can get a $4,000 cashback for their first application (Other terms, conditions and exclusions apply). Buyers and refinancers can get this competitive variable interest rate. Application fee waived for loans above $150,000.
loans.com.au Smart Home Loan - (Investor, P&I)
3.19%
3.21%
$0
$0 p.a.
80%
A competitive variable investor rate for borrowers with 20% deposits. Low fees, redraw facilities and repayment flexibility.
State Custodians Low Rate Home Loan with Offset - LVR up to 70% (Owner Occupier, P&I)
2.83%
2.85%
$0
$0 p.a.
70%
A competitive rate with no application or ongoing fee.
UBank UHomeLoan - 3 Year Fixed Rate (Owner Occupier, P&I)
2.69%
3.19%
$395
$0 p.a.
80%
A competitive fixed interest rate loan with no ongoing fees. Requires a 20% deposit.
Mortgage House Advantage Home Loan - 70 (PAYG Essentials)
2.79%
2.83%
$600
$10 monthly ($120 p.a.)
70%
A very low variable interest rate for home buyers with a 30% deposit. This product has a 100% offset account.
Virgin Reward Me Variable Home Loan - LVR <= 80% ($500k to $750k Owner Occupier, P&I)
3.18%
3.32%
$0
$10 monthly ($120 p.a.)
80%
This flexible, competitive variable rate mortgage comes with a 100% offset account and redraw facility.
UBank UHomeLoan - 1 Year Fixed Rate (Owner Occupier, P&I)
2.74%
3.38%
$395
$0 p.a.
80%
Fix your mortgage for 1 year with a very competitive rate and no ongoing fees.
Virgin Reward Me Fixed Rate Home Loan - 3 Year $300k+ Special offer (Owner Occupier, P&I)
2.79%
3.26%
$0
$10 monthly ($120 p.a.)
80%
A competitive fixed rate mortgage available with a 10% deposit.
Beyond Bank Total Home Loan Package - Variable LVR ≤80% (Owner Occupier, P&I)
3.15%
3.56%
$0
$395 p.a.
80%
A low rate variable mortgage for home buyers. Comes with a 100% offset account and has no application fee.
Mortgage House Advantage Home Loan - 80 (PAYG Essentials)
2.88%
2.92%
$600
$10 monthly ($120 p.a.)
80%
A competitive variable rate for home buyers with a 20% deposit. This product has a 100% offset account.
Hume Bank Intro Package - 2 Year Fixed (Owner Occupier P&I)
2.88%
4.11%
$0
$375 p.a.
95%
$2,000 cashback for eligible refinancers. Get a very low fixed interest rate for two years plus package discounts. Available with a 5% deposit.
State Custodians Low Rate Home Loan with Offset - LVR 80% to 90% (Owner Occupier, P&I)
3.20%
3.22%
$0
$0 p.a.
90%
Save on interest with a free 100% offset account and buy your property with just a 10% deposit.
Hume Bank Flexi Low Rate Home Loan - (Owner Occupier, P&I)
3.04%
3.04%
$0
$0 p.a.
95%
$2,000 cashback for eligible refinancers. This flexible, basic home loan offers a very low rate and you only need a 5% deposit.
State Custodians Low Rate LOC - LVR up to 80% (Owner Occupier, IO)
3.15%
3.16%
$0
$0 p.a.
80%
A low-fee line of credit loan from an online lender. Unlock the equity in your home and make interest-only repayments with a competitive rate.
UBank UHomeLoan - 1 Year Fixed Rate (Investor, P&I)
2.89%
3.84%
$395
$0 p.a.
80%
Investors can enjoy flexible repayments and an easy application process with this pioneering online lender.
State Custodians Low Rate Home Loan with Offset - LVR 80% to 90% (Investor, P&I)
3.45%
3.47%
$0
$0 p.a.
90%
Access a fee-free offset account and a special interest rate for investors.
Virgin Reward Me Variable Home Loan - LVR <=80% ($500k to $750k Owner Occupier, IO)
3.74%
3.76%
$0
$10 monthly ($120 p.a.)
80%
A variable rate home loan with no application fees.
Adelaide Bank SmartFix Home Loan - 2 Year Fixed Rate (Owner Occupier, IO)
3.59%
3.37%
$375
$15 monthly ($180 p.a.)
80%
Home buyers with a 20% deposit can get this low interest-only rate. It also comes with a 100% offset account.

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