Can I get a home loan with no credit check?

A credit check is a crucial part of the home loan application review process, and most lenders will not approve your home loan application without it. Some lenders may offer, with no credit check, home loan pre-approvals, but the full, formal approval will depend on your credit history. 

The legislation of the National Consumer Credit Protection Act in 2009 requires lenders to review credit or loan applications after collecting as much information as possible about you. Since your credit file contains relevant information regarding your ability to take on and repay debt responsibly, lenders access it to arrive at a lending decision faster.

You should remember that a credit check can be useful for you as well, as a way of preparing to apply for a home loan. Consider finding out your credit score and see if you need to take steps to improve it. If you have taken on debt in the past and paid it back in time, you are likely to have a good credit score. In case you’ve had some bad experiences with debt, you can use a credit check to gauge how specific incidents can impact your credit score positively. Either way, understanding your credit history can help you convince lenders that you can repay their loan comfortably.

Can I prequalify for a home loan with no credit check? 

A home loan pre-approval can tell you about the size of the home loan you’re eligible for. If you’re unsure about the home you want to buy, knowing how much you can borrow can simplify budgeting for and finding a suitable home. 

However, a no credit check home loan pre-approval, which is usually a system-generated approval, may not be reliable. The full assessment prepared by the lender includes a credit check and provides a more accurate estimate of the amount you can borrow. Given this, the full assessment is generally the preferable option.

Again, prequalifying for a loan does not guarantee that your loan application will be approved, as the lender may need to evaluate the property you’re buying. Equally, if you don’t get a pre-approval after a full assessment, it doesn’t reduce the chances of your home loan application getting approved. You may want to discuss the pre-approval rejection with the lender and find out if it had anything to do with your credit score or credit history. Lenders may suggest the steps you can take to rectify your credit situation if that is the cause for the rejection, to get your home loan application approved.

Can I apply for bad credit home loans with no credit check?

Just because you have a bad credit score or a problematic credit history doesn’t mean you can’t get a home loan. You can choose to discuss your credit-related issues with the lender before submitting your application and see if you get options appropriate for your financial situation. For instance, lenders may suggest applying for a smaller loan amount, under 80 per cent of your home’s value, and possibly charge a higher interest rate. You’ll need to put up a higher deposit, which may require saving up for a longer time. However, you’ll be able to improve your credit score if you successfully repay the loan in time, with no delayed repayments.

Another option which can allow you to borrow more than 80 per cent of your home’s worth is agreeing to pay Lender’s Mortgage Insurance (LMI). While LMI, calculated based on a percentage of the loan amount, can be a significant cost, it gives lenders the confidence they’ll get their money back. Depending on how much LMI you can pay for, you may be able to borrow as much as 95 per cent of the property value. Alternatively, some lenders may recommend adding a co-signer to the loan who has a better credit rating or getting someone to guarantee the loan for you. 

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