Did you know that not every lender in Australia uses a credit score to assess home loan applications?

It is possible to get a fair decision from a lender using common sense, as long as you meet their guidelines.

Do all of the major banks credit score?

All of the major Australian banks use credit scoring to some extent.

Some lenders, such as ANZ and Westpac, rely heavily on credit scoring to make the decisions on their home loan applications.

Whereas CBA, St George and NAB tend to use a combination of scoring and manual credit assessment. They retain some ability to override a decision made by their system, however, they are still reluctant to use it.

As mortgage brokers, we are in a unique position. We know the systems used by the banks and have learnt a great deal about the way that their credit scoring algorithms work.

If you would like our help with your mortgage then please call us on 1300 889 743 or enquire online.

Do they all score applications the same way?

There are significant differences in the way that the major banks credit score.

Some lenders will almost always decline loans from someone with excessive enquiries on their credit file. Other lenders are more focused on someone’s assets and liabilities.

Which banks don’t credit score?

Some of the smaller lenders do not use credit scoring at all! A real person with some common sense can assess your application.

Our mortgage brokers are experts in credit scoring, please call us on 1300 889 743 or enquire online to find out how we can help.

Do the LMI providers credit score?

All of the major Lenders Mortgage Insurers use credit scoring, in fact they are much stricter than the banks.

Genworth Financial, QBE LMI, Westpac LMI, ANZ LMI and St. George Insurance all use credit scoring.

It is almost unheard of for a Lenders Mortgage Insurer to override a credit scoring decision. If you are declined there is nothing you can do except for applying with another lender or reducing your loan so that Lenders Mortgage Insurance is no longer required.

QBE LMI for example, has two scorecard systems that are used for each and every LMI proposal sent to them by the banks and you must pass both systems!

One looks at your Equifax (previously Veda Advantage) credit file and the other assesses your entire application including the loan purpose, loan amount, serviceability, security property and other aspects of your situation that are not related to your credit history.

Don’t worry, some of our lenders have a Delegated Underwriting Authority (DUA) which allows them to approve loans that the mortgage insurers wouldn’t normally look at

What do their scores look like?

Each bank has their own system of credit scoring, and as a result their scores all have a different format with different meanings.

With some lenders a higher score is better, and with others a lower score is preferable.

CBA for example assigns home loans with a score from 1 to 5, the lower the better. Applications given a score of 1 or 2 are fast tracked for a quick approval, whereas applications scored as a 3 are referred for a manual decision. Applications that are scored as a 4 or 5 are almost always declined.

Citibank uses a scoring method that is more similar to the USA’s FICO score. This is because it relies primarily on the credit history of the applicants, with less weight given to the other aspects of their situation such as their employment, asset position and loan purpose.

Citibank’s score is in the format of a letter ranging from A to D. A, B and C applications are approved based on their merits. D applications are referred to Citibank’s mortgage insurer for assessment. It is rare that D applications are approved if the LVR is over 80%.

Have you been declined?

If your bank has declined your home loan because of your credit score, then the worst thing you can do is apply with several more lenders and end up with a decline from them as well!

Each application will lodge an enquiry on your credit file, further reducing your credit score for future applications.

Instead, if you enquire online or give us a call on 1300 889 743, then one of our mortgage brokers can fully assess your situation. We can help you to identify why you failed their credit score, and help you to apply with the right lender this time.

Remember that there are many lenders that do not credit score and still have competitive interest rates, you just need to know which ones they are!

  • JRoot

    How do the lenders credit score for an individual who is completely new to the Australian bank, lets say a foreigner who’s trying to take a loan with the bank for the first time?

  • Hi JRoot,

    Since the foreigner has no credit history in Australia, it’s advisable to establish your credit history. It improves your credit score before you apply for a home loan.

    Create a bank account, get a credit card, mobile plan, or internet service as proof of your payment records. Also make sure everything is registered in your name and listed at your residential address.

    Pay your bills on time every time; paying your credit card bills in full every month can help you create a good credit history.

    Build a good relationship with your bank. If possible, have your salary paid directly to your bank account and avoid any overdue fees.

    This will help you to establish a good credit record but these are just as some steps and should be viewed as a guide only. You could refer to our following page for more information: https://www.homeloanexperts.com.au/credit-score-home-loan/no-credit-history-home-loans/

  • Jesmin

    Are there banks that offer home loans despite a low credit score?

  • Hey Jesmin,

    There are several bank and non-bank lenders that do not credit score applications but the rules vary significantly depending on the lender, so we usually work out which lenders you qualify with and then let you decide which one you would prefer to apply with. We also have access to specialist lenders that can accept serious credit history issues as long as your loan is for no more than 90% of the value of your property. Note that if you have a problem with your credit history such as a default, judgement or court writ, it is likely that you will pay a higher than normal interest rate.

  • sophie

    Hi, I’m not entirely sure why my bank declined my loan even if my credit score should be just enough for me to get through…

  • Hello sophie,

    You can try out the credit score calculator, which uses a similar method to that of the banks and lenders mortgage insurers to assess loans. It can be a great guide for you to help understand why the bank declined your loan. You can then enquire online directly through the page to have one of our mortgage brokers look into your situation. Here’s the link to the credit score calculator:

  • Colt

    I think I talked my parents into finally becoming my guarantor so this means I can avoid a hefty LMI. Can you help me calculate just how much LMI I could be saving so I can budget and plan things out?

  • Hi Colt,
    You can simply input your loan details into our LMI calculator, which should work out how much LMI you will be charged. This should give you an accurate estimation of how much LMI you will be saving. Here’s the link to the calculator:

  • jackson

    So a lender with a DUA means less conservative credit policies too?

  • Hi jackson,

    Yes, because the lender uses their own policies, not those of their insurer. This allows them to take a common sense approach rather than sticking to the LMI guidelines. With a DUA in place, credit policies are more flexible and the lender has the option to approve any loan that falls within their agreed DUA criteria.

  • Rundell

    Do St George or NAB consider credit reporting from Dun & Bradstreet and not only from Equifax?

  • No, there may only be a select few lenders that can consider Dun & Bradstreet credit reporting. The majority of the banks and lenders here only accept Equifax credit reporting.

  • Jaysinh Rahevar

    I m looking to refinance my home but my credit score is 560 .
    My wife and my income is total $150000 can we get reference .
    Which bank is good to go

    Thank you

  • Hi Jaysinh,
    A slew of lenders recently announced cuts to their interest rates over the past few months so it’s a great time to refinance your home loan. We have almost 40 lenders on our panel and we’re confident we can find you a good deal.
    However, before we can recommend lenders suitable for your needs, one of our specialist mortgage brokers will need to do a full assessment. Please give us a call on 1300 889 743 or fill in our online enquiry form: https://www.homeloanexperts.com.au/free-quote to discuss your situation.

  • Mary

    Hi , do ING primarily use equifax or illion when applying for a home loan

  • Hi Mary,
    Most lenders use Equifax including ING. ING’s lending policy is quite possibly one of the most conservative in Australia and they do not accept people with a bad credit history. You can also read our review of ING home loan here: https://www.homeloanexperts.com.au/lender-reviews/ing-home-loan-review/

  • Glenn

    Hi, I’m trying to work out the best place to apply for a home loan if you have a poor credit rating. I have no debt, 10% deposit, stamp duty and other fees but I was declined by ANZ at the close of business before the public holidays due to a poor credit score. I was in the hospital and didn’t receive the rates notice and just forgot to pay. Next thing I know I received a letter to go to court, where we came to an agreement to pay $100 per week until I’m caught up.

  • Hi Glenn,

    Many major lenders such as ANZ will simply decline your application if you have defaults or other adverse listings on your credit file. However, there are a few lenders who may be able to help applicants with poor credit scores. They understand that certain life events can cause reliable borrowers to have a few black marks on their credit file albeit at a slightly higher interest rate.

    However, you’ll be able to refinance your home loan with a major lender at a competitive interest rate once the black marks have fallen off your credit file.