What is the lowest credit score for a loan?

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

Your credit score, also known as Equifax Score, is used by your potential lender to determine the risk of offering a loan to you. This is an automated rating system and based on your credit file as well as the information you have provided in your application.

It is not easy to determine the specific credit score you need to achieve to qualify for a home loan, mainly because most Australian lenders don’t publish their credit criteria. Furthermore, most lenders don’t depend solely on your credit score to assess your risk. Rather, they also use their own credit evaluation alongside your Equifax Score.

Even though there is no definitive range to surely qualify for a home loan, Equifax has benchmarks that you can use as reference so you have an idea if your score can make the cut.

• Below 509 (Below Average) – If your score falls below 509, you are considered a high risk, so you may find it difficult to obtain finance from conventional lenders. Some lenders consider granting a home loan with this score but the interest rates are usually very high.
• 510 to 621 (Average) – Around 20 to 40% of Australians are in this category. This usually means that you have some negative notes on your file and you may need to provide additional requirements to get approval. But remember, most lenders will still consider their own evaluation as well as your income level in approving your home loan.
• 622 to 725 (Good) – This places you in good standing and you have a better chance to be approved for a home loan with lower interest rates than those with average credit scores.
• 726 to 832 (Very Good) – You belong to the top 40% of Australians who are considered creditworthy. Most lenders will be happy to offer you a home loan.
• 833 to 1200 (Excellent) – Home loan providers will interpret an excellent score as extremely low risk that you will default on your loan. You will find it easy to get an approval, and you can choose from more options.

How Is Credit Score Calculated?

 Your credit score is calculated by Equifax based on the information filed in your credit report at a specific point in time. There are several important contributing factors that are considered in calculating your credit score. This includes the type of credit provider, the type and size of credit requested in your application, the number of credit enquiries and shopping patterns, directorship and proprietorship information, age of credit report, pattern of credit enquiries over time, personal details, court writs and default judgements, and more. To learn more about how Equifax calculates your credit score, you can visit the company’s official website.

Home Loan for Australians with Below Average Credit Score

In Australia, bad credit home loans are offered by non-conforming Home Loan lenders. In this type of special loan, all circumstances are considered, and applications are evaluated on a case to case basis. These loan providers are generally helping people with a bad credit rating with another chance to gain control of their finances.

In fact, industry statistics indicate borrowers who have successfully applied for bad credit home loans have lower default rates compared to borrowers with clear credit.

Express Mortgage Market is a bad credit expert who can consider most non-conforming loan scenarios, whether for refinancing or purchase.

For inquiries, call Express Mortgage Market on 1300 663 997 or send email to [email protected]

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Personal Loans and Bad Credit

If you have poor credit, most credit providers consider you a high-risk borrower, but there are numerous lenders that specialise in bad credit personal loans. The first thing you should do is find out your exact credit rating, which we can provide for you.

GetCreditScore is a leading online platform that can help you obtain your credit score and credit report in just a few steps. Sign up today and get access to special offers on a range of financial products and services such as credit cards, personal loans, car loans, home loans, business loans, and insurance.

Your credit report can help you determine what mistakes you committed that caused your credit score to decline. You can also review the document for errors that should be addressed immediately – perhaps a lender or debt that you do not recognise.

If your credit report is accurate, you can take the following steps to improve your credit score before applying for bad credit personal loans:

• Automate repayments. We recommend you set up direct debits online to avoid late payment fees. A calendar reminder can help you keep track of your accounts to make sure you stay on top of your payments.
• Reduce debt-to-credit ratio. You should try to pay at least double the minimum amount required to reduce your credit card and loan debts.
• Clear defaults. Take a look at your credit report and close any accounts you no longer use.

If none of the tips above is viable, but you want to consolidate your debt, taking out bad credit personal loans may be a reasonable solution. There are lenders who are willing to take a deep dive into your application and listen to your side of the story.

What are personal loans used for?

There are several circumstances for which you can use bad credit personal loans:

• Medical expenses. If you need urgent medical attention, taking out a personal loan can help cover your treatment costs.
• Debt consolidation. You can roll multiple debts into a single payment through a personal loan. 
• Car repairs. If you own a car, repair costs are inevitable, but you can take out a personal loan to get the job done immediately.
• Rental bonds. The cost of moving houses is high enough even without the security deposit. If you need money to pay the rental bond, you can take out a personal loan.

Want to know if you are eligible for bad credit personal loans? Your first step should be to obtain a copy of your credit report and credit score. Sign up with us today to get exclusive offers on financial products and services!

What is the minimum credit score required for a personal loan?

Your credit score is just one of the many factors lenders consider when calculating your loan amount and interest rate. At Equifax, our credit scores range from 0 to 1,200. Higher numbers indicate better credit. Scores above 800 are viewed as ‘excellent’. You have usually ‘bad’ credit if your credit rating is below 500. However, some lenders accommodate borrowers who have credit ratings under 200. You can also use credit repair services to improve your score and qualify for personal loans with better interest rates. 

Can I get a personal loan with bad credit?

There are traditional lenders who specialise in bad credit personal loans to accommodate borrowers who have poor credit scores. However, not all bad credit scores are equal – for instance, paid defaults are viewed more positively than unpaid defaults. The same can be said for defaulting to an energy company versus defaulting to another finance company. 

The lenders who offer bad credit personal loans take these factors into account when assessing your application. Moreover, credit providers favour borrowers who have held the same job and home for a long time.

It is worth noting that getting a personal loan with a bad credit score is significantly more difficult than obtaining a loan with a good credit score. That is because loans are centred around trust, and lenders need to ensure that you are capable of repaying them in full.

You should also understand that loan applications are subject to risk assessment. If a lender believes that approving your application is a significant risk, you are likely to incur a considerable interest rate. However, you can always improve your credit score over time and refinance your loan to get a better deal. 

The new Comprehensive Credit Reporting (CCR) system contains more information that will affect your ability to borrow money or get credit. For example, the inclusion of repayment history now displays your positive financial habits; if you remain diligent about keeping up with your credit obligations, your credit report can demonstrate your sound financial management to lenders. You may even move from one risk category to another, giving you much better chances of getting approved for a personal loan. The implementation of Comprehensive Credit Reporting is also expected to drive more market competition, leading to lower interest rates in light of your positive credit behaviour.

Take the first step towards a better financial future and check your credit score and credit report now! You can also use the information found on your credit report to see if you qualify for a home loan, car loan, or credit card. Sign up with us today to get exclusive offers on financial products and services!

Disclaimer: The information contained in this article is general in nature and does not take into account your personal objectives, financial situation or needs. Therefore, you should consider whether the information is appropriate to your circumstance before acting on it, and where appropriate, seek professional advice from a finance professional such as an adviser.

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