What to know and how to prepare when applying for a home loan with credit challenges.
So, your credit score’s not perfect. Maybe you’ve missed a bill. Maybe you’ve had a rough patch. Maybe the bank’s said no before. That doesn’t mean you’re out of options.
In fact, more lenders than ever are offering solutions designed to help people find solutions, even if they’ve hit a few bumps along the way.
Can you get approved with a lower credit score?
Many Australians may not meet the rigid criteria of traditional banks. Whether you’ve had a missed repayment, a rough patch, or you’ve recently gone out on your own and started a business, you’re not alone.
More and more borrowers are turning to non-bank lenders, which offer home loans designed for real life and not just perfect paperwork.
These include:
- Near prime loans for those just outside traditional lending boxes.
- Alt doc loans for borrowers who may not have standard financial documentation.
- Poor credit score loans for borrowers who are rebuilding or recovering after a rough patch.
Each of these is slightly different but the goal is the same: to help more people get approved.
Prime vs Near Prime
A near prime loan is designed for borrowers who don’t quite qualify for a “prime” loan, but don’t need specialist lending either.
You could be someone with:
- A minor credit issue
- A higher debt-to-income ratio
- A shorter employment history
- A recent switch to self-employment
Unlike major banks, near prime lenders look at the full picture. They won’t just assess you based on a credit score. Instead, they’ll consider your income, employment situation, and future repayment ability.
This approach is more human and far more helpful if your story doesn’t fit a traditional bank’s checklist.
What’s alt-doc?
Alt doc (short for “alternative documentation”) loans provide a workaround. Instead of tax returns and payslips, you can verify your income using:
- Business Activity Statements (BAS)
- Bank statements
- A letter from your accountant
This structure gives freelancers, sole traders, contractors and small business owners a chance to access competitive financing options without having to jump through restrictive, traditional lending criteria.
Set yourself up for a “yes”
While non-bank lenders are a more flexible option, there are still a couple of things to consider before applying to make sure you walk away with the best loan for you.
Check your credit report
It’s good to know what you’re credit score is before you meet with your broker. You can obtain a copy of your credit report through the reporting agencies: Equifax, Experian and Illion.
Avoid opening new credit accounts
When applying for a home loan, avoid opening new credit accounts in the months leading up to your application. Every time you apply for credit, it can trigger a hard inquiry, which can impact your credit score.
Reduce existing debt
Paying down your existing debts may not always be an easy option. But consolidating multiple debts under a single loan can also improve your credit score — as well as make them easier to pay off.
Get your paper trail sorted
Even if you’re applying with alt doc options, make sure your financials are up-to-date and easy to understand. Have your BAS, bank statements or accountant’s letter ready early.
Refinance home loan options
Already have a mortgage but struggling with repayments or trying to consolidate debt? Refinancing through a lender that offers poor credit score loans or near prime solutions could give you more manageable terms, or even access to equity.
It’s worth speaking to a lender or broker who understands how non-bank solutions work. The right refinance home loan can give you breathing room — and a better plan forward.
Ready to apply?
You don’t need to have everything figured out before reaching out. Whether you’re self-employed, recently knocked back, or just not sure where you stand it’s worth having the conversation with your broker.
At Bluestone, we assess income a differently. You don’t need to tick every traditional box. You just need the right support and a lender that understands your unique situation.
Start by speaking to your broker or reaching out to the Bluestone team today.
Terms and conditions and lending criteria apply. All applications are subject to assessment.
The information provided in this article is general in nature and is not intended to be financial advice. We always recommend you seek your own, independent financial advice which can take into consideration your specific circumstances.
