Whether you’re entering the property market for the first time or planning to upgrade, understanding your credit score for mortgage approval is crucial. In this guide, we’ll explain how credit scores work, what’s considered a “good” score, and what to do if your credit rating needs improvement before applying for a house loan.
What Exactly Is a Credit Score?
Your credit score—sometimes referred to as a credit rating—is a number calculated by independent agencies like Equifax, Experian, or illion. It reflects your borrowing behaviour, payment history, and how reliably you’ve managed credit in the past.
This score helps lenders decide whether to approve your home loan application, how much to lend you, and at what interest rate.
In the context of buying property, your credit rating for mortgage approval helps lenders assess how risky it might be to lend to you. The better your score, the more likely you are to qualify for a favourable home loan.
What Is a Good Credit Score to Buy a House?
In Australia, credit scores typically fall between 0 and 1,200, depending on the credit reporting agency. Here’s a general breakdown of what different score ranges mean when applying for a house loan:
| Credit Score | Rating | Implication for Home Loan Applications |
|---|---|---|
| 800 – 1,200 | Excellent | Very strong approval chance & rates as well as the most loan features available |
| 700 – 799 | Good | Strong chance of approval with competitive rates |
| 500 – 699 | Fair | Approval possible, but terms may be less favourable |
| Below 500 | Low/Poor | Higher risk, limited lender options, or higher rates |
So, what is a good credit score to buy a house in Australia? Ideally, aim for 700 or above. While you can still get approved with a lower score, a higher one improves your chances and can save you thousands in interest over the life of your loan.
Why Your Credit Score Matters for a Mortgage
Your credit score for mortgage applications gives lenders a snapshot of your financial behaviour. Here’s how it impacts your home loan experience:
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Loan approval – High scores suggest low risk, increasing your chances of being approved.
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Interest rates – Good credit can unlock lower rates, reducing the overall cost of your loan.
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Borrowing power – A strong score may mean you can borrow more.
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Loan features – Your score can influence whether you’re offered flexible features like offset accounts or redraw facilities.
Can You Get a Mortgage with a Low Credit Score?
If your credit score for a house loan is under 600, you may still be eligible for a home loan—but the path might be bumpier. Some lenders specialise in low-credit or non-conforming loans, but these often come with higher interest rates or stricter conditions.
The good news? Lenders also consider other factors, like your income, savings, employment history, and whether you’re a first home buyer.
6 Ways to Improve Your Credit Score Before Applying for a Home Loan
If you’re not happy with your credit score—or you’re unsure what it is—it’s worth taking action before you apply for a mortgage. Here are some practical ways to improve your credit rating for mortgage purposes:
1. Check Your Credit Report
You’re entitled to one free report every three months. Reviewing it helps you catch errors, outdated listings, or unauthorised enquiries.
2. Always Pay Bills on Time
Timely repayments on credit cards, loans, utilities, and rent all help to strengthen your score.
3. Avoid Multiple Credit Applications
Each new loan or credit card application results in a “hard enquiry,” which can lower your score if done too often.
4. Keep Your Credit Card Balances Low
Try not to use more than 30% of your credit limit at any given time. High utilisation can lower your score—even if you pay it off regularly.
5. Maintain Long-Term Credit Accounts
Lenders like to see a consistent, stable credit history. Closing old accounts might shorten your credit timeline.
6. Consolidate Debts if Necessary
If you’re juggling multiple repayments, consolidating them into a single loan may improve your repayment consistency—and your credit score.
Common Misconceptions About Credit Scores and Home Loans
Let’s clear up a few myths:
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Checking your own score won’t hurt it
Self-checks are “soft enquiries” and won’t lower your score. -
Income doesn’t affect your credit score
Credit scores reflect borrowing history, not earnings. -
You and your partner don’t share a credit score
Each person has their own credit record—even if you apply jointly. -
Closing accounts always improves your score
In some cases, keeping older accounts open shows a stronger credit history. -
A poor credit score can’t be fixed
Credit scores are dynamic. With better habits, yours will improve over time.
Why Speak to a Mortgage Broker About Your Credit Score?
If you’re not sure whether your credit score for mortgage approval is up to scratch, or you want to find competitive loan options based on your profile, talking to a mortgage broker can make a big difference.
At Crunch Finance, our brokers work with a wide network of lenders—from major banks to specialist lenders—each with their own credit score criteria. That means we can help you:
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Understand your current credit position.
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Take steps to improve your score.
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Find a lender that suits your unique situation—even if your score isn’t perfect.
