Have you ever wondered how a lender assesses your home loan application? This calculator can estimate the risk rating or “credit score” of your loan. The calculator uses a similar method to that used by the banks and Lenders Mortgage Insurers to assess loans.

Whilst all lenders view risk differently, you will find that this calculator is an excellent guide that can help you understand why a bank may decline your loan.

Instructions

If there is more than one person applying for the loan and you both have different answers to one of the questions then please enter the “worst” option.

Note: in regards to the ‘recent credit enquiries’ question this includes all finance types including mobile phones, electricity accounts, credit cards, store cards, interest free consumer finance (GE / Harvey Norman etc), home loans & personal loans.

What to do if your credit score is low

After using the calculator, you can fill in your details and they will then be sent to one of our mortgage brokers for an assessment. If you don’t plan to take out a home loan at the moment then please ask a question on our home loan forum. If you outline your situation in the question, we are able to give you a more personalised answer.

Too many enquiries?

We get a lot of phone calls from people who are in excellent financial positions with a good income, who still get declined by their bank! The number one cause of these declines is that the customer has had multiple enquiries on their credit file, which has caused them to fail their bank’s credit score.

What is an ‘enquiry’?

An enquiry is a record on your credit file which details any loans or credit that you have applied for. It includes the amount, which financier that you applied with and the date of the application. Each enquiry listing does not mention if the loan was approved or not, or if you proceeded with the application. It is quite common for people to get multiple enquiries from simply calling several banks and asking them what their borrowing capacity is.

The branch staff often don’t know or care about the effect of enquiries on your credit score, so they simply lodge an application so that they can work out your borrowing capacity. The end result is that most other banks will not lend to you because you have a busy credit file.

Did you know that as few as one or two enquiries on your credit file in the last six months is enough to make you fail the credit score of several banks?

You should only apply with the lender that you actually intend to get a loan with! Do not put in multiple applications in the hope of getting an approval, this will do much more harm than good.

What if you have multiple enquiries?

The good news is that if you do have multiple enquiries on your credit file, there are still some lenders that can help. However you will have to provide a good explanation as well as cheque account statements, in order to prove which loans proceeded and which did not.

Does every lender credit score?

Although most of the major banks and lenders mortgage insurers use credit scoring to assess loan applications, there are still some lenders that use manual credit assessment. This doesn’t mean they can or will approve every loan, however they can use common sense to approve loans that should be approved.

In addition to this, each lender has their own credit scoring system, so each will have a slightly different result. Some lenders do not consider a high number of credit enquiries to be a high risk, while others will decline your loan outright, simply based on the length of time in your current job.

Speak to our mortgage brokers!

The secret to getting approved is to find a lender that either does not credit score or that has a scoring system that can accept your situation. Our mortgage brokers are experts in credit scoring. Please enquire online or contact us on 1300 889 743 and we can help you to get approved for your mortgage!