What Actually Goes Into Your Credit Score (And Why It Surprised Us)

What Actually Goes Into Your Credit Score (And Why It Surprised Us)

Most people think of their credit score as just a number. It's not. It's a full report of every credit account you've ever opened, and a lender reads the detail, not just the score.

We'd never missed a payment or defaulted on anything, so we assumed our file was clean. Instead we had forgotten about a credit card we'd opened years ago, and it showed up on the report.

The Card You Forgot You Had

An old credit card sitting unused in a drawer still counts against you. Lenders look at your total available credit, not just what you're actively using, and a card with a $10,000 limit you haven't touched in years still shows up as $10,000 of credit exposure you could draw on tomorrow.

It's one of the easiest things to overlook, a card opened years ago for a specific purchase, never cancelled, quietly sitting on your file the whole time.

BNPL Works Differently, But It Still Counts

BNPL doesn't sit on your file as an ongoing balance the way a credit card limit does. What it does leave behind is an enquiry every time you sign up for a new account, and a mark against you if a payment is ever missed. Having several BNPL accounts open is something a lender assessing your application will factor into your overall financial commitments, which can affect your borrowing capacity.

What This Means When You Apply for a Home Loan

Your credit score isn't the only thing a lender looks at, but it does shape which lenders will consider your application favourably, and at what rate. An old forgotten card or a stack of BNPL accounts doesn't necessarily rule you out, but it can change your options.

The good news is a good broker will perform a credit report before you apply, which means any surprises can be addressed, or at least explained, ahead of time rather than discovered mid application.

Our Take

Assuming a clean payment history meant a clean credit file wasn't quite right. Checking your credit report properly, understanding what's actually on it, and knowing how a lender will read it, is worth doing before you ever submit an application.

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