Quick Answer
Most Australian lenders prefer a credit score above 600 (Equifax scale) for a standard home loan approval. Scores above 700 open up the widest range of lenders and the sharpest rates. However, credit score is just one factor. Lenders also assess your income, expenses, existing debts and employment stability. Some specialist lenders approve home loans for borrowers with scores as low as 300 to 500, though typically at higher interest rates.
Your credit score is a starting point, not the whole picture. A borrower with a 680 score and clean repayment history is often viewed more favourably than a 750 score with multiple recent credit enquiries. A broker can assess your full credit profile and match you to the right lender.
Credit Score Ranges in Australia
The most commonly referenced credit score in Australia is the Equifax scale, which ranges from 0 to 1200. The table below shows what each score band means for your home loan application.
| Score Range | Rating | What It Means for Home Loans |
|---|---|---|
| 833 - 1200 | Excellent | Access to all lenders, best rates, fastest approvals |
| 726 - 832 | Very Good | Most lenders available, competitive rates |
| 622 - 725 | Good | Standard approvals, may face some restrictions at lower end |
| 510 - 621 | Average | Limited major bank options, non-bank lenders more suitable |
| 0 - 509 | Below Average | Specialist lenders only, higher rates, may need larger deposit |
Equifax (formerly Veda) is the most commonly used bureau by Australian lenders. illion and Experian use different scales, so a score of 700 on one bureau does not mean the same as 700 on another.
The Three Credit Bureaus
Australia has three credit reporting bureaus, each maintaining their own database and scoring model.
Equifax. Formerly known as Veda, Equifax is the largest and most widely used credit bureau in Australia. Their score ranges from 0 to 1200. Most major banks and non-bank lenders check Equifax. You can access one free credit report per year directly from Equifax.
Experian. Experian uses a score range of 0 to 1000. You can check your Experian score for free through CreditSavvy (now part of the Experian group). Some lenders check Experian as a secondary bureau or in place of Equifax.
illion. Formerly known as Dun and Bradstreet, illion uses a score range of 0 to 1000. You can check your illion score for free through CreditSimple. illion is commonly used by some second-tier lenders and non-bank lenders.
It is worth checking your score with all three bureaus before applying for a home loan. Each bureau may hold slightly different information, and errors on one file may not appear on the others. If you find an error, you can dispute it directly with the relevant bureau.
What Lenders Actually Check
Your credit score is a summary number, but lenders look deeper into the detail behind it. Understanding what they focus on helps you prepare a stronger application.
Credit enquiry history. Lenders check how many credit applications you have made in the last 12 months. Multiple enquiries in a short period signal financial stress or desperation. Every application for a credit card, car loan, personal loan or home loan creates a hard enquiry on your file.
Repayment history. Since comprehensive credit reporting was introduced in Australia, your repayment behaviour on existing credit products is recorded monthly. Lenders can see if you have missed payments, paid late, or have any defaults. A clean repayment history over the past 24 months is highly valued.
Defaults and court judgments. Any defaults (unpaid debts over $150 that are at least 60 days overdue) are a significant red flag. Court judgments for unpaid debts are even more serious. Both remain on your credit file for 5 years.
Current credit exposure. Lenders assess your total credit card limits (not balances), outstanding personal loans, car finance and any other debt. High existing exposure reduces your capacity for a home loan.
Bankruptcies. A bankruptcy remains on your credit file for either 2 years from the date of discharge or 5 years from the date of bankruptcy, whichever is later. Most lenders will not approve a home loan during or shortly after bankruptcy, though some specialist lenders may consider it after discharge.
Time at current address and employment. While not part of your credit score, lenders assess stability. A longer tenure at your current job and address strengthens your application.
A borrower with a 680 score and clean repayment history is often viewed more favourably than a 750 score with multiple recent credit enquiries. Lenders look at the full picture, not just the number.
Credit Score by Lender Type
Different types of lenders have different appetite for risk, which translates to different minimum credit score expectations.
| Lender Type | Typical Minimum Score | Notes |
|---|---|---|
| Major banks (CBA, ANZ, NAB, Westpac) | 650+ | Strictest criteria, best rates |
| Second tier banks (Suncorp, Bankwest, ING) | 600+ | Slightly more flexible |
| Non-bank lenders (Pepper, Liberty, La Trobe) | 500+ | Specialist in non-standard borrowers |
| Private lenders | No minimum | Short-term, significantly higher rates |
Your broker does not just find a lender who will approve you. They find the best lender for your specific credit profile, which can mean a rate difference of 1% to 2% compared to going to the wrong lender first.
What Hurts Your Credit Score
Several common behaviours can damage your credit score, sometimes without you realising it.
Multiple credit applications in a short period. Every time you apply for credit (credit card, personal loan, car finance, home loan), a hard enquiry is recorded on your file. Each enquiry stays on your file for 5 years. Multiple enquiries within a few months can drop your score significantly.
Missed or late repayments. Even one missed phone bill or late credit card payment is recorded on your credit file under comprehensive credit reporting. A single late payment can reduce your score and raise concerns for lenders.
Defaults. A default is recorded when a debt of more than $150 is at least 60 days overdue and the creditor has issued a formal notice. Defaults remain on your file for 5 years. If the default is over $150 and remains unpaid, it stays for 7 years.
Court judgments. If a creditor takes legal action and obtains a court judgment against you, this is recorded on your credit file for 5 years. Court judgments are treated very seriously by lenders.
Bankruptcy. A bankruptcy appears on your credit file for 2 years after discharge. The National Personal Insolvency Index record is permanent. Most mainstream lenders will not consider applications until at least 2 years after discharge.
Too many credit cards. Having multiple credit cards, even if unused, increases your total credit exposure. Lenders assess the limits, not the balances. Closing cards you do not use removes this liability from your profile.
Buy Now Pay Later accounts. BNPL providers now report to credit bureaus. Active BNPL accounts and any missed BNPL payments are visible to lenders. Some lenders view BNPL usage negatively regardless of whether payments are up to date.
Payday loans. A history of payday loan applications is a red flag for many lenders, regardless of your overall score. Some lenders will automatically decline applications from borrowers who have used payday lending services within the past 6 to 12 months.
How to Improve Your Score Before Applying
If you are planning to apply for a home loan, taking these steps in the 3 to 6 months before your application can improve your credit position.
Check your credit report for errors. Obtain a free report from all three bureaus and review them carefully. Incorrect defaults, wrong addresses, or debts that are not yours can be disputed and removed. Errors are more common than most people realise.
Close unused credit cards and reduce limits. Every open credit card adds to your total credit exposure. Close any cards you no longer use and reduce the limits on cards you keep. This both improves your credit profile and increases your borrowing power.
Pay all bills on time for 3 to 6 months minimum. Building a clean repayment history is the most effective way to improve your score over time. Set up direct debits for all recurring bills to avoid accidental late payments.
Avoid any new credit applications. Do not apply for any credit cards, car loans, personal loans, or store finance in the 6 months before your home loan application. Every application creates a hard enquiry on your file.
Clear outstanding defaults if possible. If you have any defaults on your file, paying them off changes the status to "paid default." While the default still appears for the full 5-year period, lenders view paid defaults more favourably than unpaid ones.
Register on the electoral roll. Being on the electoral roll helps lenders verify your identity and address. If you are not registered, this can cause issues during the verification process.
Limit BNPL usage. Reduce or close Buy Now Pay Later accounts before applying. Some lenders require BNPL accounts to be closed as a condition of approval.
If you are planning to apply for a home loan in the next 6 months, do not apply for any other credit. Every application creates an enquiry on your file. Multiple enquiries signal financial stress to lenders.
Bad Credit Home Loans
If your credit score is below 500 or you have defaults, court judgments, or a past bankruptcy on your file, mainstream lenders are unlikely to approve your application. However, options still exist.
Specialist lenders. Non-bank lenders such as Pepper, Liberty and La Trobe Financial specialise in lending to borrowers with impaired credit. They assess each application on its merits and take into account the circumstances behind any credit issues.
Larger deposit required. Specialist lenders typically require a deposit of 20% to 30% for borrowers with impaired credit. This reduces the lender's risk and increases your chance of approval.
Higher interest rates. Expect to pay 1% to 3% more than standard home loan rates. The exact premium depends on the severity of your credit impairment and the size of your deposit.
Repair loan structure. Many specialist loans are structured as "repair" or "credit rebuild" loans. The strategy is to maintain the loan with clean repayments for 2 years, which demonstrates to mainstream lenders that your credit issues are behind you. After 2 years, you refinance to a standard home loan at a lower rate.
Broker experience matters. Non-conforming lending is a specialist area. A broker experienced with impaired credit applications knows which lenders will consider your specific situation and how to structure the application for the best chance of approval. Talk to us about your options.
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