Can I still get a home loan if I have bad credit history?

Your credit score is a number calculated by a Credit Reporting Body (CRB). It's based on an analysis of the credit file they create about you.

The credit file is a document containing the collection of credit-related data they gather about you and your financial history. It is reported as a history and summarised as an overall total score.

The credit score is used by some lenders to decide whether to lend you money, how much they will lend you and what interest rate you'll be able to get.

Your credit score is rated on a five-point scale (excellent, very good, good, average and below average).

Excellent — you are highly unlikely to have any adverse events – like defaults or arrears – harming your credit score in the next 12 months.

Very good — you are unlikely to have an adverse event in the next 12 months.

Good — you are less likely to experience an adverse event on your credit report in the next year.

Average — you are likely to experience an adverse event in the next year.

Below average — you are more likely to have an adverse event being listed on your credit report in the next year.

At Release Mortgage we work with selected lenders and can recommend you the best ones, even if you have a bad credit history.

Most banks prefer to give home loans to low-risk borrowers, or ideally, no-risk borrowers. This simplifies their paperwork, as they rely on high volume, straightforward applications that can be processed quickly. However, bad credit home loans are more complex, requiring detailed paperwork, accounting, and legal considerations. These loans take more time and effort to set up, which doesn’t align with most banks’ business models.

There are a few reputable banks in Australia that offer bad credit home loans, but they are rare and their application process is complex. Unlike banks like CBA or Westpac, these lenders require extensive paperwork, precise documentation, and significant effort, involving numerous forms and detailed facts and figures. While it's reassuring to know you have options, the best part is that you don't have to handle all this work on your own if you decide to have a Mortgage Broker.

Unfortunately, a low credit score can result in some lenders rejecting your loan application. This is because your credit report provides insight into how you've managed past and existing debts, indicating your likely repayment behaviour — a concept known as 'creditworthiness.'

However, other lenders might approve your application but may charge a higher interest rate due to the increased risk you pose.

Debt consolidation involves combining multiple debts into a single loan, typically with a lower interest rate and a more manageable repayment schedule.

This process simplifies debt management by replacing various debts, such as credit cards, personal loans, and other liabilities, with one consolidated loan. The goal is to reduce monthly payments, save on interest, and streamline finances. This can be achieved through a personal loan, a balance transfer credit card, or by refinancing a mortgage to include other debts.

We work across all major cities and areas in Australia. We specialise in Melbourne CBD and Victorian Suburbs.