A lot of first home buyers worry about a number. The credit score matters, but lenders read the whole credit report behind it and then weigh that against your income, expenses and deposit. Knowing what's on your report, and fixing problems early, can make the application process smoother.
Where your credit information comes from
Credit reporting bodies hold information about your credit history. The Office of the Australian Information Commissioner (OAIC) lists Equifax and Experian as credit reporting bodies, and notes each may hold different information about you. That's why it's worth checking more than one report.
A score is a summary each body calculates from what it holds. Different bodies use different scales, and individual lenders also run their own assessment. So a score on its own doesn't tell you whether a lender will say yes.
What lenders look at on your report
Repayment history
Credit providers can record whether you paid on time each month. According to the OAIC, a payment counts as missed if it's made more than 14 days after the due date, and repayment history stays on your report for two years. A string of late payments on a phone plan or car loan can raise questions even if everything is now up to date.
Defaults
A default is more serious. The OAIC says a default can only be listed if at least $150 has been overdue for at least 60 days, and only after the provider has sent the required notices. Defaults stay on your report for five years. Paying the debt doesn't remove the listing, though it's updated to show it's been paid.
Credit enquiries
Each time you apply for credit, an enquiry is recorded, and the OAIC says enquiries stay for five years. Several applications in a short period, such as personal loans, store cards or buy now pay later accounts, can make a lender wonder why. Shopping around for a home loan by applying directly with lots of lenders can add enquiries too. A broker can compare options before an application is lodged.
Existing credit and limits
Lenders count the full limits on your credit cards, whatever the balance. A $10,000 limit you rarely use can still reduce how much you could borrow, because the lender assumes you could draw it. Car loans, personal loans and buy now pay later accounts also go into the calculation.
Other listings
Court judgments, bankruptcy, debt agreements and serious credit infringements also appear on credit reports and stay for several years. If any of these apply to you, talk to a broker before you apply anywhere. Some lenders specialise in rebuilding situations, and timing matters.
What lenders look at beyond the report
Your credit report is one part of the assessment. Lenders also look at:
- Income and how stable it is. Roster and shift income, overtime and allowances are treated differently by different lenders. Our mining and FIFO home loans page goes into this.
- Your living expenses. Lenders review bank statements, so regular spending patterns matter.
- Your deposit and how you saved it. Genuine savings over time can help.
- How you conduct your accounts. Dishonours, overdrawn accounts and frequent gambling transactions can raise questions.
How to check your credit report
The OAIC says a credit reporting body must give you a free copy of your credit report once every three months. You can also get a free copy if you've been refused credit in the past 90 days. Request your report directly from each credit reporting body.
When it arrives, check:
- Your personal details are correct.
- Every account listed is yours.
- Any late payments or defaults are accurate.
- There are no enquiries you don't recognise, which could signal identity fraud.
If something is wrong, contact the credit provider or the credit reporting body to have it corrected.
Practical steps in the months before you apply
- Set up direct debits so every bill and repayment is paid on time.
- Avoid applying for new credit, including car finance and buy now pay later.
- Close credit cards you don't need, or reduce the limits.
- Keep your transaction accounts clean: no overdrawn balances or dishonours.
- Get a conditional pre-approval through one channel instead of applying with several lenders.
If you're buying your first home, our first home buyers page covers the grants, concessions and deposit schemes that may apply in Queensland.
Talk it through
If you're not sure what's on your credit report or how a lender might view it, we can go through it with you before anything is lodged. Call or text us on 0458 773 002, or book a free assessment. For most home loans there's no broker fee; any fee is disclosed upfront in our Credit Guide.
Common questions
How often can I get my credit report for free?
A credit reporting body must give you a free copy once every three months. You can also get a free copy if you've been refused credit in the past 90 days.
How long does a default stay on my credit report?
Five years. If you pay the debt, the listing stays but is updated to show it has been paid.
Do credit card limits affect how much I can borrow?
Yes. Lenders usually assess the full limit, whatever the balance, so reducing or closing cards you don't use can help your borrowing capacity.
Will applying with several lenders hurt my credit?
Each application records an enquiry, which stays for five years. Several in a short time can raise questions, so it helps to compare options before applying.
Sources
- OAIC: Access your credit report
- OAIC: What stays on a credit report
- OAIC: Repayment history and defaults
This guide is general information only and doesn't take into account your objectives, financial situation or needs. Talk to us about your circumstances before acting on it. Related: First home buyers.