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

How credit score affects your home loan application

What your credit score means for your dreams of homeownership.

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 Equifax Score to determine whether or not you’re at risk of default. Instead, they use their own internal credit assessments along with your Equifax Score.

While it’s tough to definitively state what the cut-off point is for a home loan, Equifax 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 7200-799 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 VedaScore 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 January 20th, 2019
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Loan purpose
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Loan type
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Name Product Interest Rate (p.a.) Comp Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment Short Description
3.59%
3.61%
$0
$0 p.a.
90%
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.
3.59%
3.59%
$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.
3.64%
3.66%
$0
$0 p.a.
80%
A simple mortgage with a competitive interest rate and no application or monthly fees. Borrow up to $2000000 from a convenient online lender.
3.59%
3.63%
$0
$0 p.a.
90%
Get a low variable interest rate and buy a property with just a 10% deposit. 100% offset account attached.
3.69%
3.72%
$445
$0 p.a.
90%
NSW and ACT customers only. Get a special discount for a limited time when you open an IMB Transaction Account.
3.49%
4.57%
$0
$395 p.a.
90%
Loans over $150000 get a discount off an already low fixed rate. Available for NSW, QLD and ACT residents only.
3.64%
3.64%
$0
$0 p.a.
70%
A low interest rate home loan with no application or ongoing fees.
3.75%
3.75%
$0
$0 p.a.
70%
A simple mortgage with no application or ongoing fees that has extra repayments plus split and redraw options. Requires a 30% deposit.
3.74%
4.49%
$445
$6 monthly ($72 p.a.)
90%
NSW and ACT customers only. 3 years fixed interest terms and free access to redraw facility online.
3.73%
3.87%
$0
$10 monthly ($120 p.a.)
80%
Earn Velocity Frequent Flyer Points with this mortgage to spend on flights and more (for a limited time, subject to eligibility requirements). Redraw facility available on this variable rate home loan. Competitive interest rate.
3.79%
3.79%
$0
$0 p.a.
80%
Access an offset account and pay no application or ongoing fees on this special variable rate for owner-occupiers.
3.80%
4.05%
$0
$0 p.a.
70%
Earn tens of thousands of Qantas Points to spend on flights, hotels and more with this variable owner occupier mortgage. Competitive variable rate mortgage that requires a 30% deposit.
3.74%
4.13%
$0
$349 p.a.
90%
Get a sharp rate plus package discounts and a 100% offset account.
3.84%
3.84%
$0
$0 p.a.
80%
Pay no application or ongoing fees and get access to a free redraw facility with this innovative online lender.
3.85%
3.85%
$0
$0 p.a.
80%
Low fee loan with extra repayments. Pay no application and ongoing fees and take advantage of split and redraw options.
3.67%
3.72%
$600
$0 p.a.
80%
Family guarantee option available. Enjoy flexible repayments and a low minimum loan amount.
3.68%
3.70%
$0
$0 p.a.
80%
A competitive variable rate mortgage for owner occupiers that comes with a no fee debit card with a $5,000 limit.
3.72%
3.72%
$0
$0 p.a.
110%
Pay no deposit or LMI and get a discounted rate with this family pledge loan. Requires a family member to act as guarantor. NSW, Qld and ACT only.
3.79%
4.22%
$0
$395 p.a.
80%
Unlock a range of savings with this competitive package home loan offer. Offset account and redraw facility included.
3.69%
3.83%
$0
$10 monthly ($120 p.a.)
80%
Earn Velocity Frequent Flyer Points on your mortgage (subject to eligibility requirements). Plus, access a 100% offset account to save on interest.
3.72%
3.74%
$0
$0 p.a.
80%
Save on interest by taking advantage of a 100% offset account along with no ongoing fees or application fees.
3.83%
4.89%
$0
$395 p.a.
80%
A flexible 3 year fixed rate loan you can use to buy your own home.
3.82%
3.93%
$0
$10 monthly ($120 p.a.)
90%
Get Velocity Frequent Flyer Points at settlement, monthly and every three years, plus the option to make up to $10,000 a year in extra repayments.
3.59%
3.58%
$0
$0 p.a.
80%
Apply online and get fast approval for this fixed rate, low-fee loan with redraw facilities. Add a 100% offset account for a small fee.
3.85%
4.69%
$0
$0 p.a.
90%
A package home loan with a sharp fixed rate and a 10% deposit option for low deposit borrowers.
3.70%
3.90%
$0
$0 p.a.
70%
Enjoy all the benefits of the Basic Home Loan and take advantage of an offset account.
3.89%
4.27%
$0
$395 p.a.
80%
New borrowers or refinancers can get a discounted rate with this package loan.
3.84%
3.82%
$0
$0 p.a.
80%
A fixed rate loan with free redraws, few ongoing fees. Apply online with a fast approval process.
3.89%
3.94%
$0
$0 p.a.
80%
Pay no application or ongoing fee and borrow up to 80% LVR.
3.75%
4.00%
$0
$248 p.a.
70%
Borrowers with a 30% deposit can get this competitive rate. Cut down on interest costs with a 100% offset account.
3.69%
4.75%
$0
$395 p.a.
90%
Enjoy a competitive rate with no application fee for this package loan.
4.04%
4.07%
$0
$0 p.a.
90%
For a limited time, pay no application or settlement fees. You can also take advantage of a free redraw facility.
3.97%
3.99%
$0
$0 p.a.
80%
Package your owner occupied loan with investment loan and receive a discounted investment rate. 100% offset account included.
3.89%
3.91%
$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.
3.94%
3.94%
$0
$0 p.a.
70%
Investors with a 30% deposit can get this low rate loan to fund their property portfolio. Take advantage of split and redraw facilities.
3.99%
3.95%
$0
$0 p.a.
90%
Borrow up to 90% of the value of the property you're buying, and pay no application fee.
4.18%
4.18%
$0
$0 p.a.
80%
Investors get a 100% offset account and pay no application or ongoing fees on this loan from an innovative online lender.
3.72%
3.72%
$0
$0 p.a.
90%
New customers can get a discounted variable rate and a fee-free redraw facility. NSW, QLD and ACT residents only.
3.69%
4.08%
$0
$349 p.a.
90%
Package your loan with other AMP products and save on rates and fees.
3.94%
4.95%
$595
$0 p.a.
95%
Borrow up to 95% LVR of the value of the property you're buying and pay no application or ongoing fees.
3.99%
3.99%
$0
$0 p.a.
80%
Get a discounted, low-fee investor loan from a convenient online lender. 20% deposit required.
3.70%
3.70%
$0
$0 p.a.
70%
Get a discount for keeping your LVR at $70% or below with this innovative online lender.
3.99%
4.86%
$0
$0 p.a.
80%
Access a fee-free 100% offset account and pay no application or ongoing fees.
3.99%
4.62%
$395
$0 p.a.
80%
Investors can enjoy flexible repayments and an easy application process with this pioneering online lender.
3.74%
4.55%
$0
$395 p.a.
90%
A fixed rate loan with a 100% offset account and the option to make additional repayments. Loans over $150000 receive a discounted rate. NSW, QLD and ACT residents only.
3.87%
3.91%
$600
$0 p.a.
95%
A home loan with no ongoing fee and a redraw facility that you can borrow up to 95% LVR.
4.29%
4.26%
$0
$0 p.a.
95%
A competitive 3-year fixed rate loan with a high max insured LVR.
3.69%
4.86%
$0
$395 p.a.
90%
Special discounted rate for first home buyers. Start your home buying journey with 2 years of fixed repayments at a competitive rate plus package discounts. Available with a 10% deposit.

Compare up to 4 providers

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UBank UHomeLoan Variable Rate - Discount offer for Owner Occupiers, P&I Borrowing over $200,000

Take advantage of a low-fee mortgage with a special interest rate of just 3.59% p.a. and a 3.59% p.a. comparison rate.

HSBC Home Value Loan - (Owner Occupier P&I)

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.

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A competitive interest rate home loan with interest only options. Interest rate 3.64% p.a.
comp rate of 3.66% p.a.

Tic:Toc Live in Loan Variable Rate - Principal & Interest

Get a very low interest rate and avoid big fees. Apply online for full approval in under 30 minutes and add a 100% offset account for $10 a month.

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