Credit Ratings: What is ‘Bad Credit’ and ‘Good Credit’?

Everything you need to know about the difference between a good and bad credit rating and how you can improve yours.

Your credit history plays an important role in getting approval for products such as mortgages, car loans and credit cards. Essentially, your credit report is a historical summary of all the loans, accounts and other lines of credit you’ve used in the past five years, including the ones you may have applied for but were not granted. This report also contains information about your open credit accounts, repayment habits and payment defaults, as well as legal information pertaining to things like bankruptcy, court writs or judgments, debt and insolvency agreements.

Whenever you apply for any sort of credit, even mobile or internet plans, the details of your application are sent to Credit Reporting Bodies (CRBs), whose business is to maintain and update your credit report. This report is then made available to financial institutions and credit lenders who may consider granting your future loan applications based on your previous history of borrowing and repayment.

In Australia, it’s common for financial institutions to privately determine credit ratings when you apply for any form of credit, including loans, credit cards and credit limit increases. They may never give you detailed information about this “internal” credit rating, but a good or bad credit rating can influence the outcome of your application. Some lenders may also have their own system of calculation to assess the amount of credit you can safely borrow based on this.

If your record tracks a poor pattern of debt repayment, you’ll naturally be considered a high credit risk and may be refused credit or offered a higher interest rate. To discover what’s on your report, request a free copy of your credit history from the CBRs in Australia, such as Dun & Bradstreet, Experian, request a free copy of your credit score through finder here.

What is a good credit rating?

credit reportIn general, a good credit rating will improve your chances of applying for credit at a higher limit with better repayment terms. While lenders are trending towards a more comprehensive or positive system of assessment, until now, the credit reporting system has predominantly focussed on negative marks such as overdue debts and credit infractions.

As such, a healthy credit report is signalled by the lack of black marks like late payments and credit defaults. That said, a blank credit report isn’t necessarily assuring to lenders. Most lenders are likely to prefer someone with a proven record of responsibly maintaining open accounts over someone with no history of borrowing. The characteristics of a good credit report include established credit accounts with low balances, regular repayments made on or before the due date, and a clean legal record.

How can I develop a good credit rating?

  • Establish healthy accounts. As long as you regularly pay your bill on time, having a mobile or internet plan, electricity account or Foxtel service in your name is a good way to establish proof that you are a responsible borrower.
  • Make punctual payments. Paying your bills on time sends good signals to lenders and demonstrates your ability to make timely repayments.
  • Stay free of debt. Avoiding debt will also demonstrate your ability to repay your balances and could position you as a low-risk applicant. Lenders may be less inclines to approve your application if you're already in debt or your credit history shows that you have trouble managing your funds.
  • Demonstrating job stability. Staying in the same job for a few years, rather than frequently hopping between jobs, demonstrates responsibility to potential lenders, as well as your ability to repay.
  • Stay in the same place. Long-term rental or homeownership also demonstrates responsibility and gives lenders the comfort of knowing you’re not likely to default on your payments.
  • Make infrequent credit card applications. Each credit card application you make shows up on your credit report regardless of whether it is approved. Having numerous credit card applications on your report, again, can also send negative signals regarding your eligibility and ability to manage your funds.

Learn more ways to improve your credit rating

What is a bad credit rating?

poor credit history

A bad credit rating can result in rejected applications, lower credit limits and more restrictive repayment terms. A bad credit report is usually scarred by things like bankruptcy declarations, payment defaults, court charges or court writs relating to finance (such as fines and fraud charges). Less extreme black marks include late payments, high credit balances and frequent applications for credit (such as applying for three credit cards in a month).

Having a lot of active credit accounts can also negatively affect your credit score, especially if you also have issues with any of the above. Unless all of your accounts are in good standing, this could indicate a lack of responsibility when managing your credit.

What can cause a bad credit rating?

The following can result in a negative credit rating:

  • Numerous credit accounts and applications. Having too many loans to your name isn’t a good look because it puts in question your ability to manage and repay all of them at once. All loan applications stay on record for five years.
  • Credit enquiries. Every time you apply for credit, the lender makes an enquiry on your credit history. This enquiry itself is then recorded on the report going forward, leaving a trail of credit enquiries that other future lenders will not look favourably upon. These stay on record for five years.
  • Late or skipped payments. Poor payment habits can be a warning sign to potential lenders, so it is always better to make a repayment on time, even if it’s a small or partial amount. It's also important to remember that loan repayment history stays on your record for two years.
  • Credit defaults. This happens when a lender takes action to retrieve an outstanding payment, and stays on your record for five years.
  • Court writs and summons. These legal blemishes stay on your record for four years.
  • Serious credit infringement or clearouts. If you fail to make payment and the creditor is unable to contact you for more than six months, a serious credit infringement will be marked on your record for seven years.
  • Bankruptcy and insolvency. These will stay on your report for five years after the start of insolvency, or two years after the insolvency ends, whichever is longer.

How to repair bad credit rating in Australia

How can I check my credit rating?

There are services in Australia that provide credit scoring, including independent businesses such as checkmyfile, CRBs like Equifax which offer credit ratings with their credit report packages, and (a joint initiative between Equifax and SocietyOne).
Get Your Free Credit Score

My Credit Alert

Order a copy of your credit file

Receive email alerts whenever specific changes occur on your credit file for 12 months. You also receive a copy of your credit file despatched within one working day.
Receive your credit file with information on:

  • Details of consumer credit enquiries
  • Details of overdue consumer credit accounts
  • Commercial credit enquiries
  • Details of overdue commercial credit accounts
  • Bankruptcy & Court Judgements
  • Writs & Summons
  • Information on your current relationship with a credit provider
  • $79.95 p.a.

While the credit scores you get from these services will vary, they can still be useful in giving you a general idea of the types of loans and credit cards you can get. In fact, checkmyfile even matches you up with “lenders who are likely to say yes to your applications”.

The range of details in the report may also vary between bureaus, so it can be useful to request free copies of your reports from all of them to see exactly what’s there and to ensure that they’re all correct. You should contact the credit reporting body as soon as possible if you find any mistakes on your credit history.

Rest assured that the details on your credit history are protected by the Privacy Act (1988) such that only you and authorised agents can access the information.

What are my options if I have a bad credit rating?

If you find that you have bad credit, you may be able to improve it by practicing responsible lending habits, such as making payments on time. It could be worth taking stock of all your credit accounts or consolidating debts so that it becomes easier to pay them off, which will improve your credit score in the long run.

There are also credit repair services that offer guidance and counselling to help improve your credit score – but just be aware that some of these services charge money and may not be worth it depending on your circumstances.

You can take comfort knowing that time is on your side in this scenario, because all of your black marks will be erased from the report in seven years if you start developing responsible repayment habits today. If you can’t wait that long and need credit, there are personal loans and credit cards that cater to customers with bad credit ratings. You can compare other credit options if you have a bad credit rating here.

While knowing your credit rating is useful when improving your credit history or applying for a loan, it's merely an indicator of whether you'll get the credit you want. However, you should also consider other eligibility requirements such as your present employment, total income and current assets before you apply for your next line of credit.

Tips to increase the chances of credit card application approval

Alternatives for borrowers with bad credit

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Sunshine Short Term Offer

  • Bad credit applicants considered
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Sunshine Short Term Offer

A short term loan with a fast and easy application available to those with good or bad credit. You can apply today and get approved for up to $2,000.

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Lenders that offer personal loans to bad credit borrowers

Rates last updated May 21st, 2018
Name Product Max. Loan Amount Term of Loan Turnaround Time Costs Fortnightly Repayment $1,500 Product Description
Sunshine Short Term Loans
9-15 weeks
30 Minutes - conditions apply
20% of loan amount + 4% of loan amount each month
Apply online with Sunshine Loans and you could borrow up to $2,000 paid directly into your account. Note: Centrelink must not be your primary source of income.
Nimble Short Term Loan
62 days to 1 year
1 hour - conditions apply*
20% of loan amount + 4% of loan amount each month
Apply for up to $2,000 and have 62 days to 1 year to repay. Note: Centrelink must not be your primary source of income.
Wallet Wizard Smart Loan (Up to 2K)
Up to 2 years
24 hours
47.8% APR
Apply for up to $2,000 as a convenient line of credit.
Credit24 Short Term Loan
6-12 months
Same day
20% of loan amount establishment fee + 4% of loan amount monthly.
A loan with a quick turnaround time and generous loan term. To be eligible, Centrelink must not be 50% or more of your income.
Moneyspot Small Loan
Up to 90 days
1 hour - conditions apply
20% of loan amount establishment fee + 4% of loan amount monthly.
A convenient loan up to $2,000 that can be in your account in 1 hour. Note: To be eligible, Centrelink must not be 50% or more of your income.
Ferratum Cash Loans
up to 6 months
Same Day if approved
20% of borrowed amount + 4% of borrowed amount each month
Ferratum lets you apply for up to $1,900 without a credit check.

Compare up to 4 providers

Rates last updated May 21st, 2018
Name Product Product Description Max. Loan Amount Term of Loan Turnaround Time Costs Fortnightly Repayment $5,000
Swoosh Finance
A secured loan you can apply for in 10 minutes that gives you up to 12 months to repay. Note: Max loan amount $4,600. Fees and charges included in repayment.
12-24 months
Next business day
$400 + 48% APR of borrowed amount
Wallet Wizard Smart Loan
Apply for up to $5,000 as a convenient line of credit.
Up to 2 years
24 hours
47.8% APR
Credit24 Medium Term Loan (Good Credit)
A loan with a quick turnaround time and generous loan term. To be eligible, Centrelink must not be 50% or more of your income.
12-24 months
Same day
$400 establishment fee + 4% monthly interest
Nimble Medium Loan
Apply for up to $5,000 and get approved in 1 hour - conditions apply.
Up to 2 years
1 hour - conditions apply*
Application fee of $400 + 47.62% APR
Fair Go Finance Personal Loan
Loans up to $10,000 are available even if you have bad credit. Note: You must earn more than $500 per week.
3-36 months
Within 24 hours
from 17.90% p.a. + establishment fee of between $460 - $695 + $5 monthly fee

Compare up to 4 providers

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74 Responses

  1. Default Gravatar
    MichaelJune 5, 2017

    I notice on my credit file certain things that don’t apply to me how can I get them removed from my file

    • Staff
      HaroldJune 5, 2017Staff

      Hi Michael,

      If you need to remove something from your credit file you might need to a credit repair. You can check the further details here.

      I hope this information has helped.


  2. Default Gravatar
    JoyMay 10, 2017

    Ifself support only can i still have chance to get a credit card? My fiancee sending me money every month.

    • Staff
      LouMay 11, 2017Staff

      Hi Joy,

      Thanks for your question.

      Most if not all credit card brands require a certain form of income (that you can support with proper documents) to get approved. Some require income from work while other also accept Centrelink benefits as a form of income. If you are not currently working or receiving Centrelink benefits, you may find it difficult to get a credit card.

      Nevertheless, you may want to compare low-income credit cards on this page. Please read through the eligibility criteria to apply for each card, before submitting your application.


  3. Default Gravatar
    BellaNovember 29, 2015

    I have low credit score but no defaults etc what are my chances getting a credit card

    • Default Gravatar
      SarahJanuary 31, 2016

      If I have a credit score in the top 20% does that mean I also have a good credit rating? Can u have a good score but a bad credit rating? Ta

    • Staff
      JonathanFebruary 1, 2016Staff

      Hi Sarah, thanks for your inquiry!

      Your VedaScore sums up your credit file in a number between 0 and 1200 (also known as the credit rating). The higher your VedaScore, the more likely you’ll be accepted when applying for credit.

      I hope this helps.



    • Staff
      JonathanNovember 30, 2015Staff

      Hi Bella, thanks for your inquiry!

      Aside from an individual’s credit score the bank also takes into account your income, liabilities and other information. If you meet the minimum application requirements for a card then you will be eligible to apply. You may like to compare low interest rate credit cards, which have lower requirements than other types of credit cards.



  4. Default Gravatar
    KimOctober 26, 2015

    Kulwinder Malhi
    My credit rating 650
    I have apply to many applications
    All applications on my file
    How removed application on my file

    • Staff
      JonathanOctober 27, 2015Staff

      Hi Kim, thanks for your inquiry!

      To remove applications on your file you can seek help from a credit repair agency.



  5. Default Gravatar
    jovanOctober 23, 2015

    hi i have been bankruptcy from 2002 to 2007 after i the time i pay payments to government now i still go problem with same bank my record no change and i can get to the banks after 8 years thanks


    • Staff
      JonathanOctober 26, 2015Staff

      Hi Jovan, thanks for your inquiry!

      The bankruptcy listing remains on your credit file for two years from the annulment date, or five years from the beginning of the bankruptcy – whichever comes later. If the record is still on your credit file you may like to consult credit repair services which can help fix incorrect records on your file.



  6. Default Gravatar
    SjOctober 14, 2015


    I have two utility defaults on my credit rating, how ever they have been paid. and accounts paid. i was wondering if their is a way i can get them removed? i am wanting to consolidate some debt with a personal loan, how ever i don’t want to make my credit worse by applying and getting declined.


    • Staff
      JonathanOctober 15, 2015Staff

      Hi Sj, thanks for your inquiry!

      If a negative mark/ record has been resolved generally it can be removed from your credit file by consulting with a credit repair agency. They will investigate your negative listings and if they are able to remove them they will go about the necessary removal process for you.



  7. Default Gravatar
    AdamSeptember 30, 2015

    I have a Veda score of “Average” or 520, but with Experian its only 270 and “below average”. I have not made any applications for credit in the last 12 months. I am confused as to the differences between the scores and am wishing to apply for a credit card within the next month. Obviously I would with fro a provider to look at the Average score rather than the below average score.

    • Staff
      JonathanOctober 1, 2015Staff

      Hi Adam, thanks for your inquiry!

      Different issuers use specific credit agencies such as Veda or Experian. Their credit rating criteria is not actually disclosed to the public so unfortunately we do not have the details on how they calculate an individual’s credit score. If you meet the application criteria for a credit card and do not have a bad credit history then you will be eligible to apply for the credit card.



  8. Default Gravatar
    IanJuly 30, 2015

    Hi I have checked my credit files and They are clear. I own my own home outright and i have no debts of any kind . I always pay my bills on time. My income is a Government pension which i receive every fortnight. I recently applied for a credit card and was rejected. Why? and is there any credit card that i can apply for without having a credit history. I feel like i am being punished for not having a credit history at all maybe i should not have paid cash for everything i own. I just wanted to have a credit card for emergencies only. can you advise me on where to go? to get the best credit card and establish a credit rating

    • Staff
      SallyJuly 30, 2015Staff

      Hi Ian,

      Thank you for your questions and we’re sorry to hear about your rejected application.

      Although most credit card issuers will require the cardholder to have a good credit history, a low rate credit card has lower income requirements and may be more likely to accept an applicant with a limited credit history.

      Here’s a comparison of some of the low rate credit cards available on the market.

      You may also wish to visit our credit rating repair guide for some tips.

      You can also read over this page to gain some insight into why your application may have been declined.

      However, before you apply for another credit card, you may wish to speak with some credit card issuers directly to discuss your options and chances for acceptance, as several rejected credit card applications will have a negative impact on your credit rate and reduce your chances of approval even further.

      I hope this has helped answer your questions.



  9. Default Gravatar
    RenJuly 30, 2015


    I have a judgement on my file,due for deletion in December, added 5 years ago now and I have had no credit since. I am looking to apply for some interest free credit on some house hold goods. My rating is in the bottom 20%. What are my chances of being approved? Will my score increase by a lot in December? And, can I get it removed sooner?

    • Staff
      SallyJuly 30, 2015Staff

      Hi Ren,

      Thank you for your comment.

      If you continue at this rate, it can be assumed that your credit file will continue to improve by December. However, as a financial comparison service, we are unable to confirm exactly how much it will have improved by then.

      As credit issuer’s have varying eligibility requirements regarding different credit applications, it is also difficult to confirm whether or not your application will be approved.

      As far as having the judgement removed from your file, unless it is an incorrect statement, then you’ll be unable to have it removed before the set deletion date.

      To gain a greater insight, you may need to get in touch with a credit advisory service to discuss your current credit rating.

      I hope this has helped answer your question.



  10. Default Gravatar
    camJuly 20, 2015

    When it come to credit enquiries, how may would be considered bad within the last 5 years I have 46. Not realising when I turned 18 all this gets put on a report.

    I’m trying to get finance but got declined due to my credit. I had a default which I got removed as it wasn’t true.

    • Staff
      JonathanJuly 21, 2015Staff

      Hi Cam,

      Thank you for your inquiry.

      Personal details and defaults are kept on your file for five years, and any enquiry will be added to your credit report. This will include any loan applications, as well as mortgage and utilities. If you may have applied for several enquiries for a short span of time, it may have a negative effect on your credit.
      You may want to check our page for credit repair. This page explain how credit repair works and how incorrect listings will be removed from your file.

      I hope this helps.



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