How Your Credit Report Impacts Your Mortgage Application - Dec 2025

How Your Credit Report Impacts Your Mortgage Application

When you're applying for a home loan, your credit report is among the first things that lenders check. It determines whether they think you're a low-risk or high-risk borrower and it can actually influence the approval, interest rate and even the amount you're eligible to borrow.

If you're going to buy your first home, refinance or purchase an investment property, here's what you need to know about how your credit report will impact your mortgage application.

What is a Credit Report?

Your credit report is a comprehensive record of your credit history. It contains:

Credit cards, personal loans and mortgages (current and previous)

• Repayment history for the past 24 months

• Defaults, late payments or skipped bills

• Applications for credit (even "buy now, pay later" plans!)

• Any court judgments or bankruptcies

Lenders use your credit score (a number from 0 to 1,200) to help them determine how creditworthy you are.

Why Do Lenders Care?

When you request finance for a home loan, lenders ultimately want to know whether you will pay back the loan regularly and on time.

So ultimately, having a good credit score can:

✅ Raise your odds of being approved for a loan

✅ Enable you to get a better interest rate

✅ Boost your borrowing capacity

Conversely, a poor credit history, can:

❌ Disqualify your approval for a loan

❌ Lead to a higher interest rate

❌ Reduce the amount you can borrow

Popular Credit Blunders That Can Damage Your Application

Its worth noting that there are some credit mistakes that you can make that may trigger red flags for lenders and these include:

• Late payment of bills (utility or phone plans)

• Too many applications for credit within a short period (also be mindful when applying online)

• High limits on credit cards or exceeding your limit

• Not paying your debts on time (credit cards, personal loans, car loans etc)

• Use of Buy Now, Pay Later facilities (e.g., Afterpay, Zippay)

• Defaults or collections action

• Being associated with a company that has defaults

Even minor oversights can reduce your score, so it's worth staying on top of things.

How to Improve Your Credit Health

If you're considering applying for a mortgage within the next 6–12 months, now's the time to prepare your credit.

How to do it:

Obtain a copy of your credit report (free through Equifax, Experian or illion)

• Pay bills on time, arrange direct debits or reminders

• Avoid excessive applications for credit

• Reduce your credit card balances

• Challenge any inaccuracies on your credit file immediately

What If My Credit Isn't Perfect?

Don't panic, a few imperfections don't always mean you can't obtain a home loan.

There are lenders out there that have a more relaxed view and as a mortgage broker, its my job to point you in the right direction to help you:

• Assess your credit position now

• Explain your situation to the lenders correctly

• Help you access loan products that are right for your individual financial situation

Ready to Check Your Credit Health?

If you're buying, refinancing or investing, your credit report is more important than you might realise. Let's have a look at it together and create a plan now that puts you in the best possible position to apply for finance.

Krishna Strickland – Mortgage & Finance Broker
📞 0407 778 881
📧 [email protected]
🌐 krishnastrickland.com.au