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. It also introduced credit scoring to Australia.

Credit scoring provides a measure of your risk of future default based on your credit history. Your credit score, or Equifax Score, is a number out of 1200 that lets lenders know how much of a risk you are.

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 833-1200 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 726-832 is considered Very Good and puts you in the top 40% of the Australian population in terms of your creditworthiness. Most lenders would look very favourably on you.
  • Good: A score from 622-725 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.
  • Average: A score from 510-621 puts you in the bottom 21-40% of the active population. 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.
  • Below Average to Average: Any score below 509 puts you in the Below Average to Average 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 VedaScore of Below Average to Average 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 Equifax Score free through finder.com.au. You’ll get a copy of your score, along with an explanation to help you sort out the ramifications of your credit history. You can also get tips on how to improve your credit score.

Remember, a low Equifax 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 22nd, 2018
$
Loan purpose
Offset account
Loan type
Your filter criteria do not match any product
Name Product Interest Rate (p.a.) Comp Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment Short Description
3.69%
3.69%
$0
$0 p.a.
90%
A special limited time offer for owner occupiers. An IMB Transaction Account must be opened with this loan.
3.64%
3.66%
$0
$0 p.a.
80%
A basic home loan with a competitive rate and low fees.
3.69%
4.86%
$0
$395 p.a.
90%
A special rate for first home buyers buying residential property and borrowing over $150K. 350K NAB Rewards Points offer available. Terms and conditions apply.
3.58%
3.59%
$0
$0 p.a.
80%
A competitive variable rate product with low fees offered by a 100% online lender.
3.49%
4.47%
$0
$375 p.a.
90%
Discount off an already competitive interest rate for loans over $150k. NSW, QLD and ACT residents only.
3.62%
3.62%
$0
$0 p.a.
80%
A discounted, competitive variable rate loan with limited fees.
3.58%
3.59%
$0
$0 p.a.
80%
A competitive variable rate product with low fees offered by a 100% online lender.
3.59%
3.62%
$500
$0 p.a.
95%
A loan that combines a competitive rate with a 100% offset account.
3.64%
3.67%
$0
$0 p.a.
80%
A low rate home loan with no ongoing fees.
3.65%
3.66%
$0
$0 p.a.
90%
A competitive variable rate home loan with no application fee.
3.68%
3.83%
$0
$10 monthly ($120 p.a.)
80%
A low interest rate home loan that allows borrowers to borrow up to 80% of the property value.
4.79%
5.44%
$0
$395 p.a.
90%
Package your 4-year fixed rate investment loan and pay no application fees.
3.74%
3.74%
$0
$0 p.a.
80%
Pay no application fee or ongoing fees with this loan.
3.84%
3.84%
$0
$0 p.a.
110%
Requires a family member to act as guarantor. Discounted rate available with family pledge loans. Family pledge loans
require no LMI and no deposit. NSW, Qld and ACT only.
4.11%
4.01%
$0
$0 p.a.
80%
Enjoy a fast application process and flexible repayment options with this fixed rate investment loan.
3.78%
3.78%
$0
$0 p.a.
80%
A basic low-rate home loan that still offers some useful features.
3.74%
3.74%
$0
$0 p.a.
90%
A competitive variable rate with a redraw facility. NSW, QLD and ACT residents only.
$0
$0 p.a.
80%
A low-fee variable rate investor loan with a fast online application process.
3.65%
4.19%
$500
$0 p.a.
95%
Get a discounted fixed interest rate for the first 12 months while you settle into your new loan.
3.72%
4.19%
$0
$0 p.a.
80%
Enjoy a variable rate with the Bankwest Equaliser Home Loan.
4.09%
4.12%
$0
$0 p.a.
95%
This loan has a high max insured LVR, making it an option for low deposit borrowers.
4.14%
4.14%
$0
$0 p.a.
80%
An investment home loan with competitive rate and 100% offset account.
3.73%
3.73%
$0
$0 p.a.
70%
A special low variable rate for owner occupiers with 100% offset account and no application or ongoing fees.
3.99%
4.62%
$395
$0 p.a.
80%
Fix your interest rate and pay principal and interest repayments on your investment.
3.64%
4.03%
$0
$395 p.a.
80%
Apply for a new owner occupier loan or refinance from another lender and receive this discounted rate.
3.65%
4.84%
$0
$395 p.a.
90%
A 2 years fixed platinum package that has $0 application and a loan redraw facility.
4.09%
4.11%
$0
$0 p.a.
90%
Access a fee-free offset account and a special interest rate for investors.
3.88%
4.89%
$0
$395 p.a.
95%
A fixed rate package with flexible repayment options. 350K NAB Rewards Points offer available. Terms and conditions apply.
3.94%
4.88%
$0
$0 p.a.
90%
Enjoy a low interest rate and borrow up to 90% (with LMI) of your property's value.
3.97%
4.02%
$445
$0 p.a.
90%
Get a competitive rate without features you may not use.
3.85%
4.18%
$500
$0 p.a.
95%
Apply for Easy Street fixed rate home loans and get a competitive loan with a fixed interest rate.
3.97%
3.97%
$0
$0 p.a.
90%
A competitive variable rate home loan with no ongoing fees.
4.09%
4.11%
$0
$0 p.a.
80%
A low variable rate loan with no application or ongoing fees.
3.64%
3.64%
$0
$0 p.a.
70%
A low-rate basic home loan requiring a 30% deposit.
3.74%
3.74%
$0
$0 p.a.
95%
A low rate home loan with no application or ongoing fees. Loan comes with 1 year of free home and contents insurance. Note that to be eligible for this loan you must be QLD resident.
$0
$0 p.a.
A basic low-rate home loan that still offers some useful features.
3.84%
4.83%
$0
$0 p.a.
80%
Get a competitive 2-year fixed rate with no application or ongoing fees.
4.19%
4.19%
$0
$0 p.a.
90%
Access to redraw facility and offset account without the annual fee.
3.94%
3.97%
$0
$0 p.a.
80%
Access the equity in your home with a competitive interest-only rate and no application fee.
3.69%
4.45%
$0
$375 p.a.
90%
Discount off an already competitive 2 year fixed rate for loans over $150k. NSW,QLD and ACT residents only.
3.68%
3.69%
$0
$0 p.a.
95%
A no frills loan with a competitive rate and a maximum LVR of 95%.
3.64%
3.78%
$0
$10 monthly ($120 p.a.)
80%
A competitive variable rate home loan with flexible features. You can earn 30,000 Velocity Points for every $100k you borrow (for a limited time, subject to eligibility requirements).
3.69%
3.71%
$0
$0 p.a.
90%
A low rate variable home loan offer with no monthly fees or application fee charge.
3.87%
3.87%
$0
$10 monthly ($120 p.a.)
90%
Get a competitive interest rate for 3 years and a discounted variable rate when the fixed period ends.
3.69%
3.69%
$0
$0 p.a.
70%
Enjoy a low variable rate with no application and ongoing fees.
3.79%
3.80%
$0
$0 p.a.
80%
A competitive rate with no ongoing monthly fees or application fees.
3.99%
4.03%
$0
$0 p.a.
95%
Enjoy a basic home loan with a high LVR and no application or ongoing fees.
3.85%
4.95%
$0
$395 p.a.
95%
A discounted package rate for owner occupiers with the ability to package a Qantas rewards earning Amplify credit card. $1,500 cashback available for refinancers. Conditions apply.
3.99%
4.99%
$0
$395 p.a.
95%
A package home loan with fee free extra repayments available during the fixed term.
4.39%
5.42%
$300
$10 monthly ($120 p.a.)
95%
Lock in a competitive fixed rate for 3 years.
3.69%
4.03%
$0
$299 p.a.
80%
Enjoy a low variable rate with no application fee.
3.59%
4.42%
$0
$0 p.a.
95%
This competitive introductory rate is a limited time offer for new owner-occupiers
3.68%
3.69%
$600
$0 p.a.
90%
Get a low variable rate along with some important basic features.

Compare up to 4 providers

Was this content helpful to you? No  Yes

Related Posts

Home Loan Offers

Important Information*
loans.com.au Essentials - Variable (Owner Occupier, P&I)

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

A competitive variable rate product with low fees offered by a 100% online lender.

NAB Choice Package Home Loan - 2 Year Fixed (Owner Occupier P&I) First Home Buyer Special

A special rate for first home buyers buying residential property and borrowing over $150K. 350K NAB Rewards Points offer available. Terms and conditions apply.

Ask an Expert

You are about to post a question on finder.com.au:

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com.au is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder only provides general advice and factual information, so consider your own circumstances, read the PDS or seek advice before you decide to act on our content. By submitting a question, you're accepting our Terms and Conditions and Privacy Policy.
Ask a question