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You’ve been saving your deposit, you’re watching suburb prices, and you think you’re pretty much ready. But there’s something quietly sitting in the background that lenders look at before they look at almost anything else – and most first home buyers only find out it’s a problem once they’ve already applied.
Your credit file.
This isn’t just about whether you’ve missed a payment or had a default. It’s a much more detailed picture than that, and some of the habits that feel completely harmless right now could be working against you when it counts most.
our credit file is a record held by credit reporting bodies that lenders use to assess how you’ve handled money over time. In Australia, three bureaus track and calculate your score independently – Equifax (the most widely used by lenders, score range 0 to 1,200), Illion (used particularly by banks, range 0 to 1,000), and Experian (growing in popularity, range 0 to 1,000).
Different lenders pull from different bureaus, which means your score can vary depending on who’s looking. It’s worth checking all three – and the good news is you can do this for free, which we’ll get to shortly.
For most mainstream lenders, an Equifax score of at least 660 is the baseline, and the major banks typically want 680 or above with no active defaults. But the number itself isn’t the only thing that matters. Lenders are reading the whole story behind it.
Since 2018, Australia has used Comprehensive Credit Reporting – which means your credit file now captures up to 24 months of repayment history across all your credit accounts. Every month you pay on time is recorded as a positive marker. Every missed or late payment is recorded too.
What specifically shows up: credit cards (including limits and balances), personal loans, car loans, home loans, any credit applications you’ve made – known as hard enquiries – and serious events like defaults, court judgments, or bankruptcy.
Your credit file.
This isn’t just about whether you’ve missed a payment or had a default. It’s a much more detailed picture than that, and some of the habits that feel completely harmless right now could be working against you when it counts most.
What doesn’t show up by default: your utility bills, phone and internet plans, and rent payments. Late rent won’t damage your score – but if a debt gets escalated to a collections agency, that can appear as a default.
This is one of the biggest shifts from the last 12 months, and plenty of buyers don’t know about it yet. From June 2025, Buy Now Pay Later providers – Afterpay, Zip, Klarna, and humm among them – now operate under the National Consumer Credit Protection Act. That means applying for a BNPL account triggers a credit enquiry, and missed payments can now be reported to the bureaus.
The upside is that responsible BNPL use can actually contribute positive repayment history to your file now. But the flip side is that multiple BNPL accounts, a missed payment, or a string of applications in a short period will leave a mark. The safest move if you’re planning to apply for a home loan in the next six to twelve months is to close BNPL accounts at least three months out and stop opening new ones.
This one surprises people every time — lenders don't just look at what you owe. They stress-test you against what you could borrow at any moment.
A $15,000 credit card you barely use could be cutting up to $90,000 off your maximum loan size — regardless of your actual balance. Closing that card before you apply is one of the single highest-impact things you can do, and it costs nothing.
Reduce or close credit facilities you don't need. It costs you nothing — and could unlock tens of thousands in borrowing capacity.
Every time you formally apply for credit – a home loan pre-approval, a car loan, a new credit card – a hard enquiry gets recorded on your file. One or two isn’t a problem. But a cluster of enquiries in a short window can look like financial stress to a lender, even if you were just comparing options.
The move is to do all your research before formally applying anywhere, then make considered applications rather than broad ones. A mortgage broker can help here too, because they can assess your options without generating multiple enquiries across different lenders.
The upside is that responsible BNPL use can actually contribute positive repayment history to your file now. But the flip side is that multiple BNPL accounts, a missed payment, or a string of applications in a short period will leave a mark. The safest move if you’re planning to apply for a home loan in the next six to twelve months is to close BNPL accounts at least three months out and stop opening new ones.
A lot of people assume that once they pay off an old debt, it’s gone. It’s not. A default stays on your credit file for five years from the date it was listed – regardless of whether you’ve since paid it in full. Paying it changes the status to “paid” but doesn’t remove the record. Serious credit infringements can stay for seven years.
This is why the timeline matters so much. If you know you have something on your file, understanding when it drops off is just as important as understanding what it is.
The most important first step is simply knowing what's actually on your file. You can request a free copy from both agencies, and it's worth checking both.
One of Australia's two main credit reporting agencies. Request your free report directly from their website.
Get free reportThe second major agency, and they can hold different information to Equifax. Don't skip this one.
Get free reportThe two agencies can hold different information about you. A creditor might report to one but not the other, so checking only one gives you an incomplete picture.
Wrong addresses or outdated personal details
Accounts closed years ago still showing as open
Payments marked late that were actually paid on time
If you find an error, you have the right to dispute it and have it corrected, free of charge. Errors are more common than most people realise.
The single best thing you can do is start thinking about your credit file at least six months before you plan to apply. That gives you time to close unused accounts, let enquiries age off, clear up any errors, and build a clean payment record going into the assessment.
The difference between a slightly impaired credit file and a clean one isn’t just about approval – it’s about the rate you’re offered. Over a 30-year loan, a better rate at the start is worth a significant amount of money. Getting your file in shape before you apply is one of the few things entirely in your control.
If you’re not sure where your credit file is sitting right now, check it this week. You might be in better shape than you think – or you might have just found yourself a six-month head start.