I’m saving for a home loan and currently have no credit history. I know lenders often consider credit scores when assessing loan applications. Would it be beneficial to take out a small loan, such as a credit card, to build my credit history and improve my chances of approval in the future?
Having a strong credit history can help when applying for a home loan, as lenders assess your ability to manage debt responsibly. If used wisely, a credit card or small loan can demonstrate reliability.
If you’re not careful, taking out loans could see you weighed down by unnecessary debt.Credit: Simon Letch
The key is to make small purchases and repay them on time to build a positive record. However, avoid unnecessary debt – lenders also consider your debt-to-income ratio.
If you prefer a safer option, some banks offer credit products like secured credit cards or small overdrafts that help establish credit without encouraging overspending.
That said, credit history is just one factor. A solid savings record, stable employment, and a sufficient deposit also play a big role. If in doubt, speaking to a mortgage broker can help tailor a strategy to your goals.
In your response to a recent published question, you stated that aged pension recipients must notify Centrelink of any material change in their assets or income.
Does this reporting requirement also apply to superannuation drawdowns when the funds are used for gifting within the allowable limits (i.e., up to $10,000 per year, with a maximum of $30,000 over five years) to assist adult children with a home purchase? I understand “material” in the Australian Accounting Standards sense, but Centrelink may define it differently. Could you clarify?
Regan Wellburn from My Pension Manager advises that a superannuation drawdown is considered a notifiable event for Centrelink. If in doubt, it’s always safer to report any financial changes. This ensures you won’t be underpaid or, worse, end up owing Centrelink money.
Any change of $2,000 or more in financial assets – such as bank accounts, super, or shares – must be reported within 14 days. For non-financial assets like cars or home contents, the threshold is $1,000. Gifting is also a notifiable event, even if it falls within the $10,000 annual limit.
