Reading Credit Reports for Mortgage Applications
Credit reports contain the full history of a borrower credit behaviour. Reading them thoroughly and catching issues early is one of the highest value activities a broker can do at fact find.
Understanding the sections of an Australian credit report
An Australian credit report contains identity details, current and past credit accounts, enquiries made in the past five years, default listings, court judgements, and bankruptcy records. Since comprehensive credit reporting was introduced, most accounts also show repayment history information for up to 24 months.
Reading repayment history information
Repayment history shows a status code for each month of the past 24 months on consumer credit accounts. Codes indicate on time, one period overdue, two periods overdue, and so on. A clean report shows zeros or O codes throughout. Any code of 1 or higher means a repayment was late and may need an explanation to the assessor.
Handling defaults and court judgements
Defaults over $150 that are at least 60 days overdue are listed on the credit file for five years from the listing date. Paid defaults should be marked as paid, though the listing itself remains. Court judgements and writs stay on file for five years. Most prime lenders will not lend with an unpaid default. Paid defaults may be acceptable depending on the lender and the reason.
Counting enquiries and managing shopping around
Every credit application generates an enquiry. Multiple recent enquiries can concern assessors because they may signal credit shopping. Brokers should ask clients about each enquiry and be ready to explain the reason. Home loan enquiries are usually less concerning than short term credit or personal loan enquiries.
Key takeaways
- ✓Pull the credit report at fact find, not after submission
- ✓Read repayment history codes for every consumer credit account
- ✓Investigate every default, paid or unpaid
- ✓Be ready to explain every recent credit enquiry
- ✓Resolve or document issues before choosing a lender
How QualifyMate helps
QualifyMate reads credit report PDFs and extracts the listed liabilities into a structured summary, surfacing the key data brokers need to review the credit position at a glance.
Key terms
Credit Report
A record of a borrower credit history held by Australian credit reporting bodies.
HECS HELP Debt
A debt owed to the Commonwealth for higher education tuition, repaid through the tax system once income exceeds a threshold.
Credit Card Limit
The maximum amount a credit card holder can spend on a card, whether or not the balance is drawn.
Related guides
Identifying Undisclosed Liabilities Before Submission
How to identify undisclosed liabilities on Australian home loan applications. Cross checks between credit reports and bank statements.
Reading Bank Statements for Home Loan Applications
How to review Australian bank statements for mortgage applications. Salary credits, expense patterns, undisclosed liabilities, and red flags.
Flagging Red Flag Transactions on Bank Statements
How to identify red flag transactions on Australian bank statements before submitting a home loan application.
Reviewing Personal Loan Statements for Home Loan Applications
How to read personal loan statements for home loan applications. Balance, repayment, end date, and consolidation checks.
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