What Credit Score Do You Need to Get a Home Loan?

Your credit score, often referred to as your Equifax Score, is a key factor lenders use to assess the risk of approving your loan application. This automated rating system is based on your credit file and the details provided in your application.

However, determining the exact credit score required for a home loan isn’t straightforward. Most Australian lenders do not publicly disclose their credit criteria, and they typically don’t rely solely on your Equifax Score. Instead, they conduct their own credit assessments alongside this score to evaluate your financial reliability.

While there isn’t a fixed credit score that guarantees home loan approval, Equifax provides benchmark ranges that can help you gauge where you stand. Understanding these benchmarks can give you a clearer idea of your loan eligibility.

Your credit score plays a crucial role in determining your ability to secure a home loan. While lenders assess multiple factors beyond just your score, understanding Equifax’s credit score benchmarks can give you an idea of where you stand:

• Below 509 (Below Average): A score in this range indicates high risk, making it challenging to secure financing from traditional lenders. While some lenders may still offer loans, expect significantly higher interest rates and stricter lending conditions.




• 510 to 621 (Average): Around 20–40% of Australians fall into this category. A score in this range suggests past credit issues, meaning lenders may require additional documentation or impose stricter terms. However, approval is still possible depending on your overall financial profile, including income and debt levels.




• 622 to 725 (Good): A good credit score improves your chances of securing a home loan with more competitive interest rates. Lenders will view you as a lower-risk borrower compared to those with an average score.




• 726 to 832 (Very Good): Being in this range places you among the top 40% of Australians with strong creditworthiness. Most lenders will be confident in approving your loan application, often with favorable terms.




• 833 to 1200 (Excellent): An excellent score signals minimal risk to lenders, making it easier to secure loan approval. Borrowers in this range typically enjoy the most competitive interest rates and a wider selection of loan options.




While your credit score is important, lenders also evaluate your income, debt-to-income ratio, and overall financial stability before making a final decision. If your score is lower, taking steps to improve it can help increase your chances of approval and secure better loan terms.

How Is Credit Score Calculated?

Your credit score is calculated by Equifax based on the information recorded in your credit report at a specific point in time. Several key factors influence this score, including the type of credit provider, the type and amount of credit requested, the number of credit enquiries, and your shopping patterns.

Additional considerations include directorship and proprietorship details, the age of your credit report, trends in credit enquiries over time, personal information, court writs, and default judgments. For a deeper understanding of how Equifax determines your credit score, visit their official website.

Home Loan for Australians with Below Average Credit Score

In Australia, bad credit home loans are provided by non-conforming lenders who assess applications on a case-by-case basis, considering individual financial circumstances. These lenders offer an opportunity for borrowers with poor credit histories to regain financial stability and access homeownership.

Interestingly, industry data shows that borrowers approved for bad credit home loans often have lower default rates than those with clear credit histories.

Blueprint Financial Services specializes in home loans and can assess a wide range of non-conforming loan scenarios, whether for refinancing or purchasing a property.