How your credit score impacts your ability to get a home loan

What your credit score means for your dreams of homeownership.

Last updated:

How credit score affects your home loan application

In 2014, the way Australians’ creditworthiness was measured changed significantly. Changes to the Privacy Act introduced Comprehensive Credit Reporting, or positive credit reporting. This meant that lenders now had new information with which to assess borrowers. This means more positive information, such as your repayment history, would affect your credit score.

What is my credit score?

Credit scoring provides a measure of your risk of future default based on your credit history. Each credit reporting body measures credit scores differently. If you get your free credit score from finder it will be delivered from Experian and will be a number between 0 and 1,000. The higher the number, the better your credit score is.

What credit score do I need to get a home loan?

Unfortunately, this question is difficult to answer. Lenders in Australia don’t make their credit criteria public. Moreover, most lenders don’t rely solely on your Experian score to determine whether or not you’re at risk of default. Instead, they use their own internal credit assessments along with your score.

While it’s tough to definitively state what the cut-off point is for a home loan, Experian scores do have benchmarks that can be useful in getting an idea of how likely you are to be approved for a home loan.

  • Excellent: A score between 800-1,000 is considered Excellent. This means you are at extremely low risk of defaulting in the next 12 months. If your score is in this range, you’re unlikely to run into any trouble getting a home loan.
  • Very Good: A score from 700-799 is considered Very Good and puts you in the second-top tier of creditworthiness. Most lenders would look very favourably on you.
  • Good: A score from 625-699 is classified as Good. This still puts you in good standing and the likelihood of an adverse event occurring on your credit file in the next 12 months is considered below average.
  • Fair: A score from 550-624 puts you in the Fair category. This means you’re likely to suffer an adverse event on your credit file in the next 12 months. Keep in mind, though, that lenders will still take into account their own assessments, as well as your income and liabilities.
  • Weak: Any score below 549 puts you in the Weak category. Lenders consider the likelihood of an adverse credit event high. You may have trouble obtaining finance from traditional lenders.

Credit scores for bad credit borrowers

A credit score in the bottom two categories isn’t necessarily a death sentence for your dreams of homeownership. There are lenders who specialise in offering home loans to borrowers with bad credit. They’ll take a more hands-on approach in assessing your credit history, taking into account extenuating circumstances. You’ll end up paying more in interest, but you’ll also have the opportunity to begin rebuilding your credit history.

Read more about home loans for borrowers with bad credit

How is my credit score calculated?

Your credit score consists of a variety of factors from your credit history, including:

  • Number of credit enquiries. Applying for a lot of credit cards or loans can adversely affect your credit score.
  • Defaults. If you’ve defaulted on a debt, this will impact your credit score.
  • Type of credit applied for. Your credit score will be different depending on the type of credit and the size of the loan you’re after. Mortgages are calculated using a different risk profile than something like a personal loan.
  • Court writs or judgements. Any writs or default judgements will negatively impact your score.
  • Payment history. This is where the “positive” in positive credit reporting comes in. Your credit file will also reflect your on-time payments, which can help balance out some negative marks.

How do I find out my credit score?

You can access your Experian Score for free through finder. You’ll get a copy of your score as well as your full credit report. You can also get tips on how to improve your credit score.

Remember, a low score may limit your options, but it doesn’t necessarily close the door on your homeownership ambitions. Even with a less-than-perfect credit history, there may still be home loan options available to you.

Get your free credit score now

Compare today's home loan rates

Rates last updated October 15th, 2019
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Loan purpose
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Name Product Interest Rate (p.a.) Comp Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment Short Description
2.84%
2.84%
$0
$0 p.a.
80%
This rate will drop to 2.84% p.a on 29 October 2019 for new and existing customers. Enjoy flexible repayments, a redraw facility and the ability to split your loan. Plus, pay no application or ongoing fees.
2.84%
2.80%
$0
$0 p.a.
80%
Low variable rate mortgage for owner occupiers looking to switch. Refinancers only.
3.02%
3.04%
$0
$0 p.a.
90%
This rate is effective from 21 October for all HSBC customers. Get a low interest rate loan with no ongoing fees. Plus you can make extra repayments and free redraw online. Available with just a 10% deposit.
3.31%
3.37%
$449
$0 p.a.
90%
NSW and ACT customers only. Get a special discount for a limited time when you open an IMB Transaction Account.
2.99%
3.45%
$0
$10 monthly ($120 p.a.)
90%
Buy your home and lock in a low rate for the first two years. Available with a 10% deposit. Earn Velocity Frequent Flyer Points at settlement, monthly and every three years, plus extra bonus points for a limited time.
3.24%
3.20%
$0
$0 p.a.
80%
A competitive variable mortgage for investors looking to refinance. Principal and interest repayments. Refinancers only.
3.16%
3.60%
$0
$395 p.a.
80%
This rate will drop to 3.16% on 16 October for new and existing customers. A low variable rate loan with a 100% offset account and package discounts.
3.12%
3.32%
$599
$10 monthly ($120 p.a.)
80%
This is a competitive, flexible variable rate suitable for borrowers with a good credit history. Borrow up to 80%.
3.09%
3.12%
$0
$0 p.a.
80%
This variable mortgage has a competitive rate, redraw facility and a 100% offset account.
2.99%
3.42%
$0
$10 monthly ($120 p.a.)
90%
A competitive fixed rate mortgage available with a 10% deposit. Earn Velocity Frequent Flyer Points at settlement, monthly and every three years, plus extra bonus points for a limited time.
3.45%
3.46%
$500 (if over 80% LVR)
$0 p.a.
80%
A competitive variable mortgage for home buyers. This loan has flexible repayments and an optional redraw facility.
2.84%
3.53%
$449
$6 monthly ($72 p.a.)
90%
NSW and ACT customers only. 2 years fixed interest terms and free access to redraw facility online.
3.09%
3.12%
$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.
3.09%
3.12%
$0
$0 p.a.
70%
This mortgage has a 100% offset account, split and redraw facilities and a competitive variable interest rate.
3.29%
3.70%
$0
$395 p.a.
80%
A low rate variable mortgage for home buyers. Comes with a 100% offset account and has no application fee.
3.09%
3.12%
$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.
3.32%
3.36%
$595
$0 p.a.
90%
A discounted variable rate with low ongoing fees and redraw facility. Low deposit option available.
3.39%
4.29%
$600
$395 p.a.
95%
A package loan that offers discounts and a 100% offset account.
3.39%
3.39%
$0
$0 p.a.
95%
This flexible, basic home loan offers a very low rate and you only need a 5% deposit.
3.15%
3.19%
$500
$0 p.a.
95%
This mortgage combines a very sharp interest rate with a 100% offset account and it's available with a 5% deposit.
3.69%
4.58%
$600
$395 p.a.
95%
A package loan that offers discounts and a 100% offset account.
2.74%
3.61%
$395
$0 p.a.
80%
Fix your mortgage for 1 year with a very competitive rate and no ongoing fees.
3.15%
4.16%
$600
$0 p.a.
95%
Lock in a competitive interest rate for 1 year and pay no ongoing fees. Available with just a 5% deposit and includes a 100% offset account.
3.08%
4.48%
$0
$375 p.a.
95%
Get a very low fixed interest rate for two years plus package discounts. Available with a 5% deposit.
3.34%
3.78%
$0
$395 p.a.
80%
Unlock a range of savings with this competitive package home loan offer. Offset account and redraw facility included.
3.15%
4.07%
$600
$0 p.a.
95%
Fix your rate for the first two years with this competitive, low-fee loan. Includes a 100% offset account. Get this loan with a 5% deposit.
3.18%
3.83%
$0
$395 p.a.
80%
Get a low 3 year fixed rate with a 100% offset account and package discounts.
3.15%
3.99%
$600
$0 p.a.
95%
Fix a competitive rate for 3 years, get a 100% offset account and pay no ongoing fees. Available with a 5% deposit.
2.69%
3.37%
$395
$0 p.a.
80%
A competitive fixed interest rate product with no ongoing bank fees.
3.57%
3.59%
$0
$0 p.a.
80%
This variable rate loan keeps the features simple and fees low. This loan is offered by a 100% online lender.
2.84%
3.47%
$449
$6 monthly ($72 p.a.)
90%
NSW and ACT customers only. 3 years fixed interest terms and free access to redraw facility online.
3.79%
3.80%
$500 (if over 80% LVR)
$0 p.a.
80%
A variable investment mortgage with flexible repayments and an optional redraw facility.
3.32%
3.71%
$0
$395 p.a.
90%
New borrowers or refinancers can get a discounted rate with this package loan.
3.34%
2.99%
$0
$0 p.a.
80%
Variable interest only mortgage for owner occupied refinancers. Refinancers only.
2.99%
4.24%
$0
$395 p.a.
90%
Enjoy a competitive rate with no application fee for this package loan.
2.89%
4.07%
$395
$0 p.a.
80%
Investors can enjoy flexible repayments and an easy application process with this pioneering online lender.
3.74%
$0
$349 p.a.
80%
Low fee line of credit loan with package benefits.
3.09%
4.39%
$595
$0 p.a.
95%
Borrow up to 95% LVR of the value of the property you're buying and pay no ongoing fees.
3.69%
3.58%
$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.
3.99%
4.31%
$0
$299 p.a.
80%
Get a 100% offset account, access to a redraw facility and a competitive rate tied to your LVR.

Compare up to 4 providers

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