How to get a home loan with a bad credit score?
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Getting a home loan can be a challenging task, especially if you have a bad credit score. That being said, if you have your finances in order—and your credit score is a reflection of difficult life circumstances where you missed payments—then your less-than-ideal credit history does not necessarily mean you're ineligible for a home loan.
Lenders generally rely on credit scores to assess an individual's creditworthiness and determine the terms of a loan, but this is only one factor. Lenders will generally also consider things such as your income, expenses, and existing loans.
With careful planning and strategic steps, it's possible to improve your chances of securing a home loan, even with a bad credit score. Here’s what you need to do…
1. Know your credit score and history
If you don’t know what your credit score is, the first thing you should do is get a copy of your credit report from credit reporting agencies such as:
- Experian: call 1300 783 684
- Illion: call 132 333
- Equifax: call 138 332
Understand the factors contributing to your low credit score and identify any errors or discrepancies that can be corrected. At the very least, being aware of your credit situation is important for knowing what you need to do to improve it.
2. Improving your credit score
While it may take some time, improving your credit score is one of the best things you can do to improve your borrowing power. One of the first changes you can make—if you haven’t begun doing so—is to pay your bills on time and reduce your overall debt.
Additionally, if you can, avoid taking out any new loans and maintain a low credit utilisation ratio. Over time, these responsible financial habits can help raise your credit score. Yes, you can’t undo the past, but if lenders see that you’re on the right track, they’ll usually take that into account.
3. Save for a larger deposit
Part of having a poor credit rating is that banks will generally require you to have a larger initial deposit for your home loan. By saving up more money to put towards your home, you demonstrate financial stability and reduce the risk for lenders.
You should generally aim for a deposit of at least 20% of the property's value, although if you can it will help to save more. Unfortunately, having a bad credit score means that the banks see you as a risky investment, so a larger deposit is one of the ways you can make yourself a “safer” borrower.
4. Seek professional guidance
Consulting with a financial advisor can provide valuable insights into your home loan options. Having an expert evaluate your financial situation and give you personal advice might be just what you need if you’re struggling with bad credit.
Keep in mind that, while a bad credit score presents challenges when obtaining a home loan, it doesn’t mean you’ll never get one. By taking proactive steps to improve your credit score, saving for a larger deposit, and seeking professional advice, you can increase your likelihood of securing a home loan.
Patience and persistence are essential, as the journey towards improving your credit score may require a lot of time and effort. However, if you’ve already gotten to a point where you’re ready to take out a home loan and don’t know which lender to go with, then you’re in luck. At Mozo, we have a range of home loan providers on our database that you can compare so you get the loan that works best for you.
Home loan comparisons on Mozo - last updated 2 December 2023
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Home Variable Rate
Owner Occupier, Principal & Interest, Refinance Only
variable rate
comparison rate
Initial monthly repayment6.15% p.a.6.15% p.a.Enjoy a competitive variable interest rate from Up. No application, monthly, annual, redraw, or discharge fees to pay. Up to 50 free offset accounts available. Up home loans are only available to owner-occupiers buying or refinancing in major Australian cities. Up is 100% owned by Bendigo Bank. New joiners get $10 by signing up to the app using code UPHOMEMOZO. (T&Cs apply) Mozo Experts Choice award winner.
CompareCompareHome Variable Rate
Enjoy a competitive variable interest rate from Up. No application, monthly, annual, redraw, or discharge fees to pay. Up to 50 free offset accounts available. Up home loans are only available to owner-occupiers buying or refinancing in major Australian cities. Up is 100% owned by Bendigo Bank. New joiners get $10 by signing up to the app using code UPHOMEMOZO. (T&Cs apply) Mozo Experts Choice award winner.
- variable rate
- 6.15% p.a.
- comparison rate
- 6.15% p.a.
- variable rate
- 6.15% p.a.
- comparison rate
- 6.15% p.a.
- Upfront fees
- $0
- Ongoing fees
- $0.00
- Discharge Fee
- $0.00
- Extra repayments
- yes - up to $30,000
- Redraw facility
- yes - free
- Offset account
- yes
- Maximum loan to value ratio
- 90.00%
- minimum borrowing amount
- $50,000
- maximum borrowing amount
- $10,000,000
- type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Monthly
- Special Offers
- -
Read our Mozo Review to learn more about the Up Home Variable Rate
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Featured Product
Mozo experts choice awards won:
- Low Cost Home Loan - 2023
Unloan Variable
Owner Occupier, Refinance Only, LVR <80%
variable rate
comparison rate
Initial monthly repayment5.74% p.a.5.65% p.a.For refinancers only. Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for borrowers. No application or banking fees. No monthly account keeping or early exit fees. Apply in as little as 10 minutes.
CompareCompareUnloan Variable
For refinancers only. Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for borrowers. No application or banking fees. No monthly account keeping or early exit fees. Apply in as little as 10 minutes.
- variable rate
- 5.74% p.a.
- comparison rate
- 5.65% p.a.
- variable rate
- 5.74% p.a.
- comparison rate
- 5.65% p.a.
- Upfront fees
- $0
- Ongoing fees
- $0.00
- Discharge Fee
- $0.00
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Offset account
- no
- Maximum loan to value ratio
- 80.00%
- minimum borrowing amount
- $10,000
- maximum borrowing amount
- $10,000,000
- type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Weekly, Fortnightly, Monthly
- Special Offers
- -
Read our Mozo Review to learn more about the Unloan Unloan Variable
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Mozo experts choice awards won:
- Low Cost Home Loan - 2023
Variable Home Loan 90
Principal and Interest, LVR <90%
variable rate
comparison rate
Initial monthly repayment6.04% p.a.6.06% p.a.Affordable home loan rate for buyers or refinancers. No monthly or ongoing fees. Option to add an offset for 0.10%. Access to savings with unlimited redraws available. Minimum 10% deposit required. Advertised rates include Nov RBA rate increase. T&Cs apply.
CompareCompareVariable Home Loan 90
Affordable home loan rate for buyers or refinancers. No monthly or ongoing fees. Option to add an offset for 0.10%. Access to savings with unlimited redraws available. Minimum 10% deposit required. Advertised rates include Nov RBA rate increase. T&Cs apply.
- variable rate
- 6.04% p.a.
- comparison rate
- 6.06% p.a.
- variable rate
- 6.04% p.a.
- comparison rate
- 6.06% p.a.
- Upfront fees
- $530
- Ongoing fees
- $0.00
- Discharge Fee
- $0.00
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Offset account
- yes
- Maximum loan to value ratio
- 90.00%
- minimum borrowing amount
- $50,000
- maximum borrowing amount
- $2,000,000
- type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Weekly, Fortnightly, Monthly
- Special Offers
- -
Read our Mozo Review to learn more about the loans.com.au Variable Home Loan 90
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Mortgage Simplifier
LVR<80%, Owner Occupier, Principal & Interest
variable rate
comparison rate
Initial monthly repayment6.14% p.a.6.43% p.a.Get a competitive variable rate with ING’s Mortgage Simplifier. Free extra repayments, no monthly or annual fees. Freedom to make free extra repayments or redraws. Winner of Australia’s Best Essential Bank in the Mozo Experts Choice Awards.
CompareCompareMortgage Simplifier
Get a competitive variable rate with ING’s Mortgage Simplifier. Free extra repayments, no monthly or annual fees. Freedom to make free extra repayments or redraws. Winner of Australia’s Best Essential Bank in the Mozo Experts Choice Awards.
- variable rate
- 6.14% p.a.
- comparison rate
- 6.43% p.a.
- variable rate
- 6.14% p.a.
- comparison rate
- 6.43% p.a.
- Upfront fees
- $299
- Ongoing fees
- $0.00
- Discharge Fee
- $250.00
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Offset account
- no
- Maximum loan to value ratio
- 80.00%
- minimum borrowing amount
- $150,000
- maximum borrowing amount
- $2,000,000
- type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Fortnightly, Monthly
- Special Offers
- -
Read our Mozo Review to learn more about the ING Mortgage Simplifier
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Flex Home Loan
Owner Occupier, Principal & Interest, LVR <80%
variable rate
comparison rate
Initial monthly repayment6.19% p.a.6.43% p.a.Competitive variable rate. Multiple offset accounts available. Borrowers can also make extra repayments. Redraw facility available. Simple online application process.
CompareCompareFlex Home Loan
Competitive variable rate. Multiple offset accounts available. Borrowers can also make extra repayments. Redraw facility available. Simple online application process.
- variable rate
- 6.19% p.a.
- comparison rate
- 6.43% p.a.
- variable rate
- 6.19% p.a.
- comparison rate
- 6.43% p.a.
- Upfront fees
- $250
- Ongoing fees
- $250.00 yearly
- Discharge Fee
- $300.00
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Offset account
- yes
- Maximum loan to value ratio
- 80.00%
- minimum borrowing amount
- -
- maximum borrowing amount
- -
- type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Weekly, Fortnightly, Monthly
- Special Offers
- -
Read our Mozo Review to learn more about the ubank Flex Home Loan
* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.
** Initial monthly repayment figures are estimates only, based on the advertised rate. You can change the loan amount and term in the input boxes at the top of this table. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.
^See information about the Mozo Experts Choice Home Loan Awards
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