bad credit

Credit ratings: What is “bad credit’ and “good credit”?

Where's the line drawn between good and bad credit and how can you improve your score?

Your credit history has always been a determining factor in whether or not you were approved for a loan or credit account. However, your credit history and score has become more important with the arrival of comprehensive credit reporting (meaning more data is listed on your report) and risk-based pricing (where lenders can set an interest rate based on your credit profile).

So, the million dollar question is, do you have a good or bad credit rating? Let's find out how you can tell.

Free credit score & report

Lenders know your credit score, so why shouldn't you?

Get your credit score and comprehensive report now!

What is a good credit rating?

A good credit rating is when your credit score is high. How high? Well, that's when it gets tricky. There are a few different credit reporting bodies and they all have different systems for scoring credit. For example, if you get your free credit score from finder it will be delivered from Experian and it will be a number between 0 and 1,000. However, Equifax's credit score system rates credit scores between 0 and 1,200.

See how the credit score systems break down below:

Credit band Experian Equifax
Excellent 800-1000 833-1200
Very good 700-799 726-832
Good 625-699 622-725
Fair / Average 550-624 510-621
Weak / Below average 0-549 0-509

credit report

How can I improve my 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 on-time payments. The last two years of your repayment history is now listed on your credit report, so it's important to make your repayments on time. If you are late with one or two repayments just make sure you keep up with all of your following repayments.
  • Lower your credit limits. The credit limits of your open credit accounts are listed on your report, but not how much debt you have. So if you have three credit cards with high limits but only a bit of debt, it still may have a negative effect on your rating. Reduce your unused limit for an easy credit rating win.
  • Demonstrating job stability. Staying in the same job for a few years, rather than frequency 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 applications. Each credit application you make shows up on your credit report regardless of whether it is approved. Having numerous credit applications on your report in a short space of time will have a negative effect on your credit rating.

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?

You can check your credit score and get your full credit report for free with finder. Follow the link below to sign up and get yours today.
Get your free credit score and credit reportIf you'd prefer to order it directly from the credit bureau, you also have that option.

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

If you have bad credit listings on your credit report it's a good idea to engage in good credit behaviour, such as making repayments on time and not applying for credit too often, as you wait for the bad credit listings to come off your report. 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.

If you're in need of credit, there are personal loans and credit cards that cater to customers with bad credit ratings – see some of your options below.

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. 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.

Lenders that offer personal loans to bad credit borrowers

Rates last updated October 21st, 2018
Name Product Max. Loan Amount Term of Loan Turnaround Time Costs Fortnightly Repayment $1,500 Product Description
Sunshine Short Term Loans
$2,000
9-15 weeks
30 minutes - conditions apply
20% of loan amount + 4% of loan amount each month
$396
A small loan up to $2,000 that you repay over 9-15 weeks. Loans approved and funded in as little as 30 minutes. Centrelink must not be your primary income
Wallet Wizard Smart Loan (Up to 2K)
$2,000
Up to 2 years
3 hours - conditions apply
47.8%
$316.70
Apply for up to $2,000 and be able to access your approved loan as a convenient line of credit.
Nimble Short Term Loan
$2,000
62 days to 1 year
1 hour - conditions apply
20% of loan amount + 4% of loan amount each month
$396
A loan up to $2,000 with terms up to 62 days to 1 year. Centrelink cannot be your primary source of income.
Credit24 Short Term Loan
$2,000
6-12 months
Same day - conditions apply
20% of loan amount establishment fee + 4% of loan amount monthly.
$396
Credit24 offers this loan up to $2,000 and gives you 12 months to repay.
Moneyspot Small Loan
$2,000
Up to 90 days
1 hour - conditions apply
20% of loan amount establishment fee + 4% of loan amount monthly.
$396
Borrow under $2,000 and benefit from a transparent fee structure and a simple application. Bad credit borrowers considered.
Ferratum Cash Loans
$1,900
up to 6 months
Same day - conditions apply
20% of borrowed amount + 4% of borrowed amount each month
$396
Borrow what you need with loans starting from $300 and approval in minutes.

Compare up to 4 providers

Rates last updated October 21st, 2018
Name Product Product Description Max. Loan Amount Term of Loan Turnaround Time Costs Fortnightly Repayment $5,000
Wallet Wizard Smart Loan
Apply for up to $5,000 and be able to access your approved loan as a convenient line of credit.
$5,000
Up to 2 years
24 hours
47.8%
$243.50
Swoosh Finance
A secured loan up to $4,600 you can apply for in 10 minutes. Have up to 2 years to repay what you borrow.
$4,600
12-24 months
Next business day
$400 + 48% p.a. of borrowed amount
$244
Nimble Medium Loan
Apply for up to $5,000 and have up to 2 years to repay.
$5,000
Up to 2 years
1 hour - conditions apply*
Application fee of $400 + 47.62% p.a.
$262.75
Credit24 Medium Term Loan (Good Credit)
A small loan with long terms: Apply for up to $5,000 and have up to 2 years to repay.
$5,000
12-24 months
Same day
$400 establishment fee + 48% p.a. interest
$263.18
Fair Go Finance Personal Loan
A larger loan up to $10,000 you can apply for even with bad credit. Fast turnaround within 1 business day. Note: You must earn more than $500 per week.
$10,000
3-36 months
Within 24 hours
from 17.90% p.a. + establishment fee of between $460 - $695 + $5 monthly fee
$238.07

Compare up to 4 providers

Back to top
Was this content helpful to you? No  Yes

Related Posts

Ask an Expert

You are about to post a question on finder.com.au:

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com.au is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder only provides general advice and factual information, so consider your own circumstances, or seek advice before you decide to act on our content. By submitting a question, you're accepting our Privacy & Cookies Policy and Terms of Use, Disclaimer & Privacy Policy.

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

    • finder Customer Care
      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.

      Cheers,
      Harold

  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.

    • finder Customer Care
      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.

      Cheers,
      Anndy

  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

    • finder Customer Care
      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.

      Cheers,

      Jonathan

    • finder Customer Care
      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.

      Cheers,

      Jonathan

  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

    • finder Customer Care
      JonathanOctober 27, 2015Staff

      Hi Kim, thanks for your inquiry!

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

      Cheers,

      Jonathan

  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

    jovan

    • finder Customer Care
      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.

      Cheers,

      Jonathan

  6. Default Gravatar
    SjOctober 14, 2015

    Hi,

    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.

    Thanks

    • finder Customer Care
      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.

      Cheers,

      Jonathan

  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.

    • finder Customer Care
      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.

      Cheers,

      Jonathan

  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

    • finder Customer Care
      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.

      Thanks,

      Sally

  9. Default Gravatar
    RenJuly 30, 2015

    Hi,

    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?

    • finder Customer Care
      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.

      Thanks,

      Sally

  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.

    • finder Customer Care
      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.

      Cheers,

      Jonathan

Ask a question
Go to site