In short: There is no single minimum credit score for a home loan in Australia, but an Equifax score above about 660 (the "good" band) keeps mainstream lenders comfortable, and above 735 usually earns the sharpest pricing. Lenders read your whole report: enquiries, 24 months of repayment history, defaults and current debts. Paid defaults and lower scores can still be financed through specialist lenders at a higher rate.
Your credit file is the first thing a lender's system reads, before an assessor ever looks at your payslips. A clean file makes an application boring, which is what you want. A messy one does not necessarily mean a decline, but it changes which lenders will say yes and what they will charge. This guide explains how Australian credit scoring works in 2026, what each item on your report means to a home loan assessor, and the fixes that make a real difference within a few months.
How credit scores work in Australia
Three credit reporting bodies hold files on you, each with its own scale:
| Bureau | Score range | Bands (as published by the bureau) |
|---|---|---|
| Equifax | 0–1,200 | Excellent 853+, Very good 735–852, Good 661–734, Average 460–660, Below average under 460 |
| Experian | 0–1,000 | Excellent 800+, Very good 700–799, Good 625–699, Fair 550–624, Below average under 550 |
| illion | 0–1,000 | Similar five-band structure |
Your scores differ between bureaus because each holds slightly different data. Lenders usually pull one or two, and each lender then runs your file through its own internal scorecard, which weights things differently again. That is why there is no universal pass mark: a file that one bank's system flags can be approved by another the same day.
You can get a free copy of your report from each bureau once every three months, and after any decline. The government's moneysmart.gov.au site links to the free access points.
What is on your credit report
Comprehensive credit reporting
Since comprehensive credit reporting became mandatory for the major banks, your file shows 24 months of repayment history for each credit account: a month-by-month grid marking whether each payment was on time, or 1, 2, 3 or more months late. This is the single most influential section for a home loan assessor. Two years of green ticks says more than any score.
Credit enquiries
Every time you apply for credit, the lender records a hard enquiry showing the type of credit and amount. Enquiries stay on file for five years. A home loan assessor sees:
- How many enquiries in the last 3, 6 and 12 months
- What kind: a car loan and a home loan look purposeful; six credit cards and two payday loans look like stress
- Whether enquiries turned into accounts (an enquiry with no matching account may mean a decline)
Accounts and limits
Open credit cards, personal loans, car loans, buy-now-pay-later accounts that report, and existing mortgages, with their limits and opening dates. Credit card limits matter twice: they influence the score, and lenders count 3 to 4% of the limit as a monthly expense in serviceability regardless of balance. See how to improve borrowing power.
Defaults
A default is listed when you are 60 or more days overdue on $150 or more and the creditor has sent the required notices. It stays for five years even if paid, though it is marked as paid. Telco and utility defaults are the most common and are the ones people forget.
Court judgments and serious infringements
Court judgments for debts remain for five years; serious credit infringements (where you have left with no contact) remain for seven. Bankruptcy and debt agreements are listed for five years or longer.
How lenders read the report for a home loan
| Item on report | Mainstream lender view | Specialist lender view |
|---|---|---|
| Score in "good" or above with clean history | Standard pricing | Not needed |
| One or two late payments over 2 years | Usually fine with explanation | Fine |
| Three or more enquiries in 6 months | Caution; may decline via scorecard | Case by case |
| Paid default under $1,000, over 12 months old | Often acceptable with explanation | Acceptable |
| Unpaid default | Usually declined | Acceptable at higher rate, may need to be paid at settlement |
| Multiple defaults, judgment, or recent payday loans | Declined | Higher rate, lower maximum LVR |
| Discharged bankruptcy | Declined until several years after discharge | Acceptable 1–2 years after discharge at higher rate |
Specialist and non-conforming lenders exist for the right-hand column and price for risk. Rates might be 1 to 3 percentage points above mainstream, with the expectation that you refinance back to a mainstream lender once the file is clean. Our low deposit home loans page and debt consolidation service cover the tools for this path.
Worked example: two applicants, same income, different files
Two applicants each earn $95,000 and want a $520,000 loan for a $650,000 house in Craigieburn with a 20% deposit.
Applicant A has an Equifax score of 780, one credit card with a $5,000 limit paid in full each month, and one car loan enquiry two years ago. A mainstream lender approves at its standard owner-occupier rate. At 6.00% p.a. for illustration, repayments are about $3,118 a month.
Applicant B has a score of 590, a paid $640 telco default from 18 months ago, two credit cards totalling $15,000 in limits, a buy-now-pay-later account, and four enquiries in the last six months from shopping around online. Two mainstream lenders' scorecards decline automatically. A specialist lender approves at 7.25%, with repayments of about $3,547 a month, roughly $5,100 more a year.
Applicant B's fix: close the buy-now-pay-later account, reduce card limits to $5,000, wait six months for the enquiries to age, then apply once through a broker to a lender whose policy accepts an old paid default. Score improves, the mainstream rate becomes available, and the annual saving pays for the wait. A pre-approval assessed by a human rather than a scorecard also helps; see home loan pre-approval.
How to improve your credit score before applying
Most of these show results in three to six months.
- Get all three reports and check for errors. Wrong addresses, accounts that are not yours, or defaults that were never properly notified can be disputed and removed. Errors are more common than people expect.
- Pay every bill on time for six months. Set up direct debits for cards, loans, phone and utilities. The 24-month repayment grid is the heart of the file.
- Pay any default and get a letter confirming it. A paid default is far more acceptable than an unpaid one, and some creditors will agree to remove a listing if it was disputed or the debt was small.
- Reduce credit card limits. A $15,000 limit cut to $5,000 improves both score and borrowing power. Reduce rather than close if the card is your oldest account, because account age helps.
- Close buy-now-pay-later and payday loan accounts. Both are red flags to home loan assessors, and payday loans in the last 12 months are a near-automatic decline at many lenders.
- Stop applying for credit. Every enquiry in the six months before your home loan application counts against you. That includes "checking your rate" on personal loans and car finance where the lender does a hard pull.
- Consolidate messy debts into one. Three small loans with occasional late payments look worse than one loan paid on time. See debt consolidation guide.
- Keep an old, well-behaved account open. A long history of on-time payments is an asset.
Credit checks and your home loan application
Soft versus hard enquiries
Checking your own report is a soft enquiry and does not affect your score. A lender assessing an application makes a hard enquiry. A broker's pre-assessment across lenders is done without a credit enquiry; the enquiry only occurs when an application is lodged with the chosen lender. That is why you should apply once, to the right lender, rather than to three banks in a week.
Pre-approval
A full pre-approval is a hard enquiry and appears on your file. One pre-approval is expected on any home buyer's report. Renewing an expired pre-approval with the same lender may or may not trigger a fresh enquiry, depending on the lender.
Joint applications
Both applicants' files are assessed, and the weaker file sets the tone. A partner with a default or a thin file can push a couple into a specialist lender. Sometimes it makes sense to apply in one name if that person can service the loan alone, though ownership and legal implications should be discussed with a conveyancer. See buying property with a partner.
Thin files and new arrivals
A recent migrant with no Australian credit history has a thin file rather than a bad one. Lenders treat this differently; some accept overseas credit reports, others rely on rental and banking history. See home loans for new migrants.
Checklist before you apply
- Reports from all three bureaus obtained and checked for errors
- Any errors disputed in writing
- All defaults paid, with confirmation letters
- No new credit applications in the last six months
- Buy-now-pay-later and payday accounts closed
- Credit card limits reduced to what you actually need
- Six months of on-time payments across every account
- Explanations ready for any late payments or enquiries
- Documents gathered per the home loan documents checklist
Common mistakes
- Applying to several lenders to "see who says yes". Each decline adds an enquiry and makes the next decline more likely.
- Ignoring a $200 telco default from a phone plan you forgot to cancel. It can be the only thing between you and a mainstream approval.
- Closing your oldest card right before applying, which shortens your credit history.
- Assuming a high score guarantees approval. Score is one input; income, expenses, deposit and the property all matter.
- Not checking your partner's file until the joint application is lodged.
- Using buy-now-pay-later in the three months before applying. Even small, on-time use is read as reliance on short-term credit.
- Believing credit repair companies that promise to remove accurate listings for a fee. Accurate defaults cannot be removed; inaccurate ones can be disputed free.
Frequently asked questions
What credit score do I need for a home loan in Australia?
There is no fixed minimum because each lender uses its own scorecard. As a guide, an Equifax score of 661 or above (the "good" band) is comfortable for mainstream lenders, 735 and above usually gets the best pricing, and scores under about 500 push you toward specialist lenders. The repayment history and enquiries on your report matter as much as the number, so a clean file with a modest score often beats a high score with recent defaults.
Does checking my credit score lower it?
No. Requesting your own report from Equifax, Experian or illion is a soft enquiry and has no effect on your score. Only applications for credit that a lender assesses create hard enquiries, and those are what stay on your file for five years. You are entitled to a free report from each bureau every three months, so check all three before you apply for a home loan.
Can I get a home loan with a default?
Often, yes. A paid default over 12 months old for a small amount, especially a telco or utility bill, is accepted by many mainstream lenders with a written explanation. Larger or unpaid defaults usually mean a specialist lender at a higher rate and possibly a lower maximum loan-to-value ratio. Paying the default before you apply and obtaining a confirmation letter always improves your position.
How long do credit enquiries stay on my report?
Five years. The impact fades over time, and most lenders focus on the last 6 to 12 months. Enquiries in themselves are not fatal; a home loan enquiry, a car loan enquiry and a credit card over a couple of years is normal. What lenders dislike is a cluster of recent enquiries, particularly for personal loans, payday loans or multiple credit cards, because it suggests you are struggling for cash.
Do buy now pay later accounts affect a home loan?
Yes. Some providers now report to credit bureaus, and even those that do not show up on the bank statements lenders read. Assessors treat regular buy-now-pay-later use as reliance on short-term credit and count the limits and repayments against your borrowing power. Close the accounts and let three months of clean statements accumulate before you apply.
Will a home loan application affect my credit score?
Any lodged application creates a hard enquiry, which can lower your score slightly for a short time. A single home loan enquiry is normal and lenders expect it. The damage comes from multiple applications in quick succession, particularly if some were declined. Use a broker to select the lender first and apply once. A pre-assessment by a broker does not create an enquiry.
Talk to GNT Finance
Gorakh Timilsina assessed hundreds of applications as a senior credit officer, so we know how a credit file reads from the other side of the desk. Bring your report and we'll tell you which lenders will approve it today and what to fix for a better rate. Book a free consultation or call 0426 403 703.
Written by Gorakh Timilsina
Founder, CEO & Senior Mortgage Consultant at GNT Finance. Gorakh started as a broker assistant, spent years as a senior credit officer assessing loan applications, and now helps Melbourne families get the right loan approved. English, Nepali and Hindi spoken.