What Is The True Impact Of Your Credit Score On Your Borrowing Power?

credit score impacts borrowing power

Your credit score or rating is used by lenders to get a better understanding of any risk they may face when choosing to give you credit or lend you money.

It is an automated rating system that takes into consideration a number of factors to determine your specific credit score; including your personal and financial information that is found in your credit report.

Your credit report is a compilation of information sourced from your credit card providers, banks, mortgage providers, and utility service providers.

It will usually outline:

  • The amount of money you’ve borrowed
  • The number of applications you’ve made to borrow
  • The timeliness of your repayments

And it will also include your overall credit score, which will lie between zero and about 1,000-1,200 (this upper-end figure depends on which credit reporting agency you use).

Regardless, the higher the score you have, the less risky you are to your potential lender. A lower credit score will ultimately affect your borrowing power or even the ability to receive a loan or credit in the first place.

Unfortunately, for consumers, it can be difficult to determine the exact credit score you need to borrow money or receive credit because most Australian major lenders don’t freely make their credit criteria public knowledge. Additionally, most lenders also couple your credit score with their own qualification and evaluation processes.

So, what can you do to give yourself the best chance of securing a loan or refinancing?

What is refinancing

If you’re thinking about refinancing to access a better rate or improved features or to consolidate debt or save money, then ideally you will ensure your credit score is its highest before you apply to potential lenders.

Even though lenders use their own qualification and evaluation processes when deciding to lend money, it is always a good idea to improve your credit score before you begin the borrowing process.

Here are our top 5 recommendations on how you can improve your chances of a successful loan application:

#1 Access your credit score on your file

The information on your credit file is free for you to access and it will give you a clear indication of what your credit score is so that you can understand how you look from the lender’s perspective.

#2 Take control of your debts

If your debt landscape doesn’t look great, then start to take control of it now. Make those payments on time, pay more frequently, or increase your repayments if your budget allows. Start to consolidate debt where you can. 

Being proactive in this space and demonstrating this to a lender can work in your favour.

#3 Consider specialist lenders

There are Australian lenders who offer loans to those with lower or impaired credit scores, so you don’t always have to look to the big names if you are seeking credit. 

Other specialist lenders will work with you to better understand your personal circumstances before denying you a loan that is based heavily on your credit score.

#4 Put your savings and equity to work

what is equity

Regardless of your credit score, if you can demonstrate to the lender that you have enough savings or equity in place to borrow less than the 80% loan-to-valuation ratio (LVR) then two things may work in your favour: the lender may make exceptions to their normal lending policy, and you can potentially avoid paying Lenders Mortgage Insurance.

#5 Speak to a Think Big Financial Group Mortgage Broker

Think Big Financial Group Mortgage Brokers make refinancing easier by comparing a broad range of loans and lenders on your behalf to find the right options for you and your specific financial situation. 

Additionally, you’ll get help to complete the application paperwork, which can be overwhelming if you’ve never stepped foot into the lending space before.

Get the refinancing help you need, quickly

Refinancing, credit options, and loans come in all kinds of shapes and sizes, each with their own perks.

Our Think Big Mortgage Brokers make the process easy, hassle-free, and provide realistic finance solutions based on your individual circumstances.

It doesn’t take a long time to review your loan options, and nor does it cost anything, BUT it may get you a better loan with better benefits, regardless of your credit score.

So, when you’re ready to apply let us help you shop around for the right loan and make a single application to just one lender. Because, each time you apply for a loan it’s marked on your credit history, and if you apply for multiple loans it might reflect poorly on you and your credit score.

To avoid such multiple applications, let us do the research, so you can decide who you want to go with before making any applications.

Start now by submitting this application form.

Alternatively, book in a meeting with Gareth today to find a suitable home loan that meets your needs.


This represents general information only. Before making any financial or investment decisions, we recommend you consult a financial planner or mortgage broker to take into account your personal investment objectives, financial situation and individual needs.