The 5 Pillars of Bank Credit Assessment
When you submit a home loan application in Australia, bank credit assessors evaluate your application under five core risk categories known as the 5 Cs of Credit:
1. Capacity (Serviceability & Income)
Lenders calculate your post-tax net monthly income, subtract verified living expenses and liabilities, and apply a 3.0% APRA interest rate assessment buffer to ensure you can comfortably manage repayments. See Step 1: Borrowing Power Guide for details.
2. Character (Credit History & Conduct)
Credit assessors pull your Comprehensive Credit Reporting (CCR) file from Equifax or Illion. They check for clean repayment history across active credit lines over the past 24 months, absence of defaults or court judgments, and clean 90-day transaction account conduct.
3. Capital (Deposit & Genuine Savings)
Lenders verify your equity contribution. If borrowing above 85% LVR, banks check that at least 5% of the purchase price represents genuine savings accumulated independently over 3+ months. See Step 2: Deposits & LMI Guide.
4. Collateral (Security Property Valuation)
The bank orders an independent valuation (Automated Valuation Model or physical desktop/full inspection) to confirm the property offers suitable security for the loan amount requested.
5. Conditions (Loan Terms & Policy)
Lenders check that your employment type (PAYG probation, casual, self-employed), visa status, and property title comply with specific bank credit policy rules.
Fast-Track Your Application with CREdQ
Working with an experienced CREdQ mortgage broker ensures your application is pre-audited and packaged to meet bank underwriting standards on the first submission.