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What credit score do I need for a home loan?

An excellent, very good or good credit score means your score shouldn't impact your chances of getting a loan. Once you get below that, you need to make some financial changes.

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How does your credit score affect your chances of getting a home loan? Lenders in Australia don’t make their credit criteria public, and most lenders also don’t rely credit score alone to determine your level of credit risk. That said, the higher your credit score, the better your chances of getting loan approval.

How your credit score affects your home loan

It’s tough to definitively state what the cut-off point is for getting home loan approval, as banks and lenders consider their own internal credit assessments along with your score when reviewing your application.

However, credit score providers like Experian do have benchmarks that can be useful in getting an idea of how likely you are to be approved for a home loan. Below is a guide of how your credit score could influence your home loan approval odds with Experian, who run their credit scores between 0 an 1000. The higher the number, the better your credit score is.

  • Excellent: A score between 800-1,000 is considered Excellent. This means the bank view you as being extremely low risk of defaulting on your loan. If your score is in this range, home loan approval is likely.
  • 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 your application.
  • Good: A score from 625-699 is classified as Good. This still puts you in good standing and the bank views the likelihood of an "adverse event" occurring on your credit file in the next 12 months to be low.
  • Fair: A score from 550-624 puts you in the Fair category. This means you’re more likely to suffer an adverse event on your credit file in the next 12 months, so lenders may apply additional loan criteria or charge you a higher rate.
  • 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

What is your 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. You can get your free credit score in the Finder app, and it will be delivered from Experian and will be a number between 0 and 1,000.

How do you 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

How is your 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.

Compare today's home loan rates

Name Product Interest Rate (p.a.) Comp. Rate p.a. Fees Monthly Payment

loans.com.au Smart Booster Discount Variable Home Loan P&IHome≥ 20% Deposit

loans.com.au Smart Booster Discount Variable Home Loan
  • App: $0
  • Ongoing: $0 p.a.
Get a low discounted variable rate loan. Requires a 20% deposit. Get your loan processed fast and settle within 30 days.

Unloan Variable Home Loan P&IHome≥ 20% Deposit Refinancers only

Unloan Variable Home Loan
  • App: $0
  • Ongoing: $0 p.a.
A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.

Ubank Neat Variable Home Loan P&IHome≥ 40% Deposit

Ubank Neat Variable Home Loan
  • App: $0
  • Ongoing: $0 p.a.
Get flexibility and the option to make unlimited extra repayments with this variable rate loan.

IMB Budget Home Loan P&IHome≥ 20% Deposit

IMB Budget Home Loan
  • App: $449
  • Ongoing: $0 p.a.
A low-rate, no-frills home loan for borrowers with a good deposit and unrestricted repayments. $0 application fee for eligible borrowers with principal-and-interest repayments and deposits of at least 20%.

Macquarie Bank Basic Home Loan P&IHome≥ 40% Deposit

Macquarie Bank Basic Home Loan
  • App: $0
  • Ongoing: $0 p.a.
This flexible variable rate loan requires a 40% deposit or equity. Get fast online approval and $0 application fee and $0 ongoing fees.

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