What Credit Score Do I Need for a Home Loan?

Find out what credit score you need to get across the home loan approval line in Savvy's handy guide.

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, updated on August 7th, 2023       

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What credit score do I need for a home loan? If you’re thinking about buying a house you’ve probably asked yourself this question. Your credit rating plays a vital role in whether you are approved or declined for a home loan, so it’s important to understand what yours is and what you can do to bolster your chances of securing a green tick of approval.

What is the minimum credit score I need to get a home loan in Australia?

There is no magic credit score number when it comes to home loan approval. Knowing where you sit on the credit rating scale can help better determine how likely you are to get into your own home though. Check out our explanation table below to know where you stand. 

Credit Score Expected Outcome
Below 509
If your score is below 509, you may be considered high risk which could mean a low chance of being approved.
521 to 621
Holding a credit score between 510 and 621 means that your credit history definitely has some flaws in it, but all may not be lost. Lenders may simply need additional information before agreeing to lend you money for a home loan.
622 to 725
This credit score range is a fairly solid starting point for home lending and you might even be able to get access to lower interest rates!
726 to 832
You’ve clearly been diligent with loan and utility payments. For your efforts you should be treated favourably when it comes to applying.
833 to 1200
This is a very solid score and you will probably find that lenders will not bat an eyelid at your application for a home loan if you’re able to service the loan.

How do I find out what my credit score is?

Finding out your credit score isn’t something that many people think to do until they’re ready to apply for a loan. You can find out what your current credit score is by using a free Credit Check service online. Here, not only will you get to see where you sit between 0-1000 but you can also see what accounts are registered on your credit file, when you last applied for credit and discover helpful ways to boost your credit rating should yours leave a lot to be desired.

If I have a good credit score will I be automatically approved for a Home Loan?

While having a healthy credit score is very advantageous in applying for a home loan, your current income, employment, expenses, other debt, living arrangement, dependants (such as children) and age, all play a part in whether you pass the requirements to be approved for a home loan. In addition to all of that, lenders will also evaluate you based on their own credit rating system. The lending criteria varies across lenders and is not something that is made publicly available. Your capacity to make repayments and stable employment are big factors when it comes to getting a home loan approved.

If you are looking to increase your borrowing power and improve your chances of having your home loan approved, there are some simple tips you can follow.

Can I credit wash my score to get a home loan?

Despite its name, credit washing can be dirty business. Be extremely cautious of companies that promise to repair your credit score in exchange for a fee. Usually, information can only be removed from your credit file if it is legitimately incorrect. So, if you’ve been the victim of identity theft or incorrect credit reporting then you will absolutely want to repair your credit file, but you don’t need to pay a company to do it. By simply requesting a correction or notification of inaccuracies on your file, your credit provider is required by law to investigate.

If the less than glowing report card on your credit file is true, then no company, no matter how high the fee, can make your credit file squeaky clean. It is quite easy to fall for false promises, especially if a poor credit score is standing between you and a home loan. While the process of credit repair is legal, many of the companies who claim to be a fix all cure are not.

What is the minimum credit score for a home loan in Australia?

There is no magic credit score number when it comes to home loan approval. Knowing where you sit on the credit rating scale can help better determine how likely you are to get into your own home though. Check out our explanation table below to know where you stand.

Can I get a home loan with bad credit?

If you happen to have a low credit score, it’s still possible to get a home loan. Bad credit home loans are available for people looking for a mortgage but don’t have a high enough credit score to get them across the line with a standard mortgage application. The interest rates are often slightly higher with bad credit home loans but it’s a great way to get into your own home if you’re struggling with home loan approval. 

How to increase your home loan approval chances when you have bad credit

Start preparing early

Don’t leave it until you’re ready to apply to check your credit score, know your score as soon as you start saving for a home loan so that you have time to rectify any areas that require improvement.

Be proactive

Be proactive by taking charge of any discrepancies on your credit file, paying your bills and contacting credit providers to remedy any outstanding accounts.

Fix any errors that appear on your credit report

If you’ve checked your credit history and have noticed any errors that don’t relate to your accounts, contact the credit reporting company and the company that provided the information about you (this could be your phone service provider, for example). You’ll need to write to the two companies detailing your dispute.

Consider using a guarantor

If your credit score is low a guarantor could help get you across the line. If you have a trusted relative or friend who is comfortable using their own home as security for your line, you could increase your chances of having your home loan approved.

A joint application could reduce your chances of home loan approval

When applying as a couple, if one person has a low credit score, you run the risk of having the application declined. If you have the capacity to service the loan as an individual, you may be better off applying for the mortgage alone.

Still have further questions regarding scores and approvals?

Why do I have a low credit score if I’ve never had a loan or credit card?

If you’ve never applied for personal credit, or never had an account such as a credit card or personal loan, your credit score could be low simply because you’ve never demonstrated your creditworthiness before. 

What happens if I apply for a home loan and I’m declined?

As far as your credit score goes, an application for a mortgage will be recorded in your credit history. Multiple applications for credit in a short period of time can reflect negatively on your credit file, so it is important to understand the reasons for decline before applying again.

What if the other applicant has a different credit score than I do?

When applying for a loan as a couple, just as all of your other information such as income and expenses will be assessed together, so too will your credit scores.

Am I guaranteed a low home loan interest rate if I have a high credit score?

A high credit score can certainly mean more negotiating power when it comes to your home loan interest rate. However, the interest rate you are offered when stepping through your home loan application is determined by a number of factors such as the official cash rate set by the Reserve Bank, your lender, the size of your loan, deposit amount and overall strength as a borrower. 

Can missing a loan repayment affect my credit score?

Yes, particularly if your loan repayment goes 14 days past it’s due date. A one-off missed loan repayment is unlikely to severely damage your credit score, however, multiple late payments could indicate that you’re in some level of financial hardship. If a payment of more than $150 goes 60 days overdue then it is likely to result in a default being recorded on your credit file.

Can refinancing my home loan to consolidate debt help my credit score?

If having multiple forms of credit was difficult to manage and you risked missing payment deadlines, then refinancing your home loan to consolidate debt [link to this article once it is published] could help improve your credit score. By demonstrating discipline with making your home loan repayments on time, you can build a positive repayment history which should translate into an improved credit score over time.

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