The credit score you need to qualify for a home loan

Article summary

• A score of 610+ usually gives you a fair chance of home loan approval.
• The bank’s lending policy plays a role; some banks may be willing to approve low credit scores. Your best bet is to apply to multiple banks, which you can do with the services of a home loan comparison service such as ooba Home Loans.
• You can take steps to improve your credit score within a short period of time.

Your credit score plays the biggest role in whether or not you get approved for a home loan. It’s a three-digit number, based on your financial history, that tells the bank how much of a risk you are.

The minimum credit score for a home loan

• A score of 610+ usually gives you a fair chance of home loan approval.
• Some banks have less strict lending policies, and they may be willing to grant home loans to customers with a lower credit score.
• Hence why it helps to shop around different banks, which you can easily do by employing a home loan comparison service such as ooba Home Loans.

What is a really good credit score?

The higher your credit score, the better your chances of securing favourable interest rates.

Here’s a more detailed breakdown:

• 670+ = excellent.
• 650 – 669 = good.
• 634 – 649 = average.
• 610 – 633 = below average.
• Below 610 = very poor.

Find out your credit score

You can use ooba Home Loans’ Bond Indicator to access your credit score. This is a 100% secure, online tool that is available free of charge and without any obligations.

Can I improve my credit score?

If you find out your credit score is low, you can start taking measures to improve your credit score before applying.

The following measures can help improve your credit score within a short period:

• Pay outstanding bills.
• Pay all your incoming bills on time.
• Pay more than just the minimum instalment on your bills.
• Pay off credit card debt.
• Avoid spending up to your credit limit on your credit card and store accounts.
• Pay off store credit, cell phone accounts and bank loans – especially for other assets, such as a car.
• Refrain from opening new credit accounts where possible.
• Check your credit report for inaccuracies and take it up with whichever credit bureau performed the calculation.
• Close your accounts when you’ve paid the balance owing.

How long before my credit score improves?

Changes can show up within three months, although it’s best to wait six months.

Who calculates my credit score and how?

A registered credit bureau will compile a record of your personal credit transactions on behalf of the bank, and calculate your credit score based on the following:

• Your debt repayment history.
• Amounts owed.
• Types of credit applied for and how often.
• How long your accounts have been open.
• How much of your available credit you’re using.
• Whether there is any history of you not honouring a debt obligation that resulted in bankruptcy or a judgment against you.

Giving yourself the best chance of home loan approval

As mentioned, if you’re worried about your credit score, try to apply to multiple banks with ooba Home Loans, and give yourself the best chance of approval.

If you’ve already tried applying and been rejected because of your credit score, note that ooba Home Loans is successful in securing home loan financing for two in every three applications that are initially turned down by a bank.

Even if you’re confident in your credit score, applying to multiple banks will give you the best chance of getting a favourable interest rate. ooba Home Loans will allow you to compare packages on offer by the banks and secure the one with the best rates.