Do you know how important your credit score is?

A credit score is an automated assessment of how risky you are to a creditor.

For us, this means how risky your home loan application is to a potential lender.

Your credit score is calculated entirely by computers using information from your loan application and credit file without any human input.

Learn the basics

If you’ve been declined by a bank due to your credit score then do not apply for another loan! Being knocked back again can reduce your score even further.

We’ve created a simple set of guides that you can use to learn about how the banks score applications, and get approved.

What is shown on my credit file?

A credit file is a record of your credit history collected by credit reference agencies such as Equifax, which used to be Veda Advantage.

This information includes details such as a history of all the loan applications you have applied for, defaults on loans, bankruptcy, and other adverse events.

As of 2014, your credit file also includes positive credit reporting data such as a record of your on time repayments on your current debts. This gives lenders a more accurate picture of your current situation.

Your credit file may have a credit score on it, however the lender will also generate their own credit score from the data in your credit file.

You can find out your credit score using our free credit score calculator.

Why did I fail credit score?

Whilst you may be declined for a loan for a number of reasons, the most common reason is due to not reaching the lender’s minimum score for approval. Unfortunately lenders calculate your credit score using their own methods, which they do not publish.

However, the most common causes for a failed credit score include:

  • Bad credit history.
  • Lack of genuine savings.
  • Instability of address or employment.
  • Missed or late payments.

How can I improve my credit rating?

In most cases, there are two or three aspects of your application which are causing you to have a low score. By rectifying these problems you can improve your score and apply for a mortgage again.

If you have problems with your credit file then you can talk to credit repair experts who can help you remove defaults that were incorrectly or unjustly lodged on your file.

Some tips for improving your credit score are:

  • Do not overdraw your credit card.
  • Make all of your repayments on time.
  • Pay any defaults listed on your credit file.
  • Stay in your current job and living address until you apply for your loan.
  • Show that you are good with your money by making regular deposits to a savings account.

In some cases, it may be easier to approach a lender who does not use credit scoring to get a loan.

Which lenders use credit scoring?

While the majority of Australian lenders use credit scoring, there are still some that do not. Even if you have a bad credit history, we know which of these lenders would be most likely to approve your loan application.

In other cases, it’s a matter of applying with a lender that will score your situation more favourably. For example some lenders are more concerned about your stability so will not accept people in a new job, whereas others will accept someone in a new job but not somebody with defaults.

Apply for a home loan

Our expert mortgage brokers know how banks think and can help you improve your credit score! We also know lenders who don’t use credit scoring!

To use our expert service, please enquire online or call us on 1300 889 743.

  • Andrew

    Do my old defaults still show in my credit file? I’ve had a small utility bill default of $600.

  • Hey Andrew, depending on when it was listed, a default will appear on your credit file up to 5 years from the date it was lodged.

  • Erron

    Will a few credit enquiries ruin my chances of getting a good deal on a home loan? I have no records right now so I’m thinking what it would be like if I did ask around a few banks before making a decision.

  • Hi Erron,

    If you’ve never had any enquiries on your credit file before then it may actually improve your credit score. Where it can be a problem is if you apply with multiple lenders in a short timeframe. A better solution can be taking the help of a mortgage broker – they can properly assess your situation, for free, and provide you with up to three home loan recommendations with an indicative interest rate and list of fees. The best news is that you won’t get an enquiry on your credit file so your credit score won’t be affected.

  • Joey

    I’ve been following those tips to improve my credit rating. So now I want to know is can I get a 80% SMSF commercial loan?

  • With an SMSF loan, you can borrow up to 80% of the value of a residential property but generally only up to 70% of the value of a commercial property. Please check out the SMSF commercial loan page to learn more:

  • Franz

    Hi HLE.

    My wife (who will act as a co-applicant) has a VedaScore of 668, but no credit inquiries, defaults or even any credit products. My score, as the primary applicant, is 735…will that be a problem with any lender?

  • Hi Franz,
    That should be ok as long as everything else is ok

  • Ric

    Since Equifax has now acquired Veda, will my credit scores change due to new calculations or something?

  • Hi Ric,
    No, the calculations behind your credit score will remain the same. The only difference in your experience should be that VedaScore will now be referred to as Equifax Score.

  • Aashish Patel

    My score is 580, do I have any chance of getting a home loan? I have some credit inquires 2 months back. If this will affect my loan application, how long should I wait for before looking into home loan?

  • Hi Aashish,
    If you have a good income and deposit then we should be ok to get you approved. You can contact us here

  • Chirayush Patel

    I have 1 unpaid default with Vodafone for 1.4k will be deleted in mar 2018 . other 2 default deleted from my credit file. What are my chances of getting home loan if I pay Vodafone default

  • Hi Chirayush,
    Thanks for posting
    We’d need to know a little more about the situation. How much are you borrowing and how much would the property be valued at? Also are you working full time?

  • Vaidhya

    I’m planning to apply for a home loan. However, I don’t have a good credit history. Can you give me some quick fix how to improve my score?

  • Hi Vaidhya,
    The first step is to identify what is causing your loan to fail the bank’s credit score, and work on those issues. Additionally, you could try these:
    Apply for a $500 credit card for the lender you will apply for a mortgage with and pay it on time.
    Don’t apply for loans that you don’t need. You want to minimise the number of enquiries on your credit file.
    Stay in your current address and job for as long as possible.
    Open a savings account and save as much as you can.

  • Rolland Brown

    I hired hackersnerwork0001 to repair my credit score few weeks back. I saw a post about them on reddit and it was convincing enough so I decided to trust them. They helped me get back on my feet financially and i am eternally grateful to them. You can get in touch with them via their gmail…