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5 top tips to come back from bad credit

Bad Credit

In Australia, bad credit is often a reason why someone is declined a loan or service.

Being told you have bad credit can come as a complete shock. Others are aware they’ve had a financial hiccup, but hope they can ignore it.  Some are very upfront and acknowledge having it, but don’t know what to do.

At Fair Go Finance we understand bad credit can happen to anyone.

The best approach in every situation is to start rebuilding and improving it, starting today.

Our 5 top tips to recover from bad credit

  1. Get a copy of your credit report to understand what exactly has caused your bad credit rating.

  2. Do a budget to be clear on your income and expenses.

  3. If you have any outstanding defaults or bad debts, work with the provider to clear and finalise them.

  4. Make sure you pay all of your bills, loans and debts on time, every time.

  5. If you do need a loan, research it properly. Be upfront about your bad credit.

Let’s explore these tips in more detail…

1. Get a copy of your credit report

In Australia, there are 4 consumer credit reporting agencies who manage credit reports. They are:

  • Equifax (Previously known as Veda Advantage.) Their website is

  • Dun and Bradstreet. Their website is

  • Experian. Their website is

  • Tasmanian Collection Service. Their website is (Only for Tasmanian residents.)

By obtaining your credit reports, you will be clear on what is listed against you and what has caused you to have bad credit.

As each agency may deal with different lenders and service providers, you’re best to obtain all 4 of them (if you live in Tasmania) or the first 3 if you live elsewhere in Australia.

Examples of bad credit listings are late payments, paid defaults, unpaid defaults, part 9 agreements and bankruptcy. Another is numerous credit enquiries within a short space of time, which is explained further in tip 5.

Understanding what has caused your bad credit, whether you can do anything to improve it right now (such as clearing an unpaid default) and how long it will be listed for, is your first step. The relevant consumer credit reporting agency will be able to give you guidance on all of these.

2. Do a proper budget

If you have bad credit, it is imperative you complete a proper budget.

By doing so, you will be able to establish if there is an ongoing debt problem which needs to be addressed, or simply a requirement to be more focused on your income and expenses.

The Australian Government provides a fantastic website called MoneySmart, which has free budget planners and also provides advice on how you can make better financial decisions in all aspects of your life.

Once you have prepared your budget, you will be able to determine if you have the room to negotiate any outstanding payments or defaults, which leads us into tip 3!

3. Clear and finalise any outstanding arrears, defaults etc

If your bad credit was a result of missed payments or unpaid debts (such as a default) this is the time to focus on clearing these arrears or outstanding debts.

Now that you have your budget completed, you need to contact the lender or service provider, and together you can set up a payment plan or lump sum payment to resolve what is outstanding.

If you had an unpaid default, and can negotiate an amount to finalise it, this will mean your credit report can be updated to indicate this debt is now settled, which will help improve your credit standing.

As a lender, we really want you to understand that we are here to help you get back on track. It’s never too late to contact your lender/service provider, as they would much prefer to deal with you directly, and resolve the outstanding debt, than pursue legal recovery options.

4. Now, pay all of your loans and debts on time

Moving forward, your credit report will improve by ensuring you pay all of your credit cards, loans, rent, utility bills etc when they are due.

If you don’t, missed or late payments will again be listed on your credit report, showing you are not reliable in repaying your current financial commitments.

Again, we want to stress to you, that if you know you can’t make a payment, the best possible thing you can do is contact your lender or service provider before the payment is due.

By contacting them and discussing your situation with them, you have the opportunity to work out a temporary solution which can avoid another negative listing on your credit report.

5. Research properly, if you do need to apply for a loan

If you have bad credit, one of the worst things you can do if you need a loan, is to apply to numerous lenders in the hope one of them will approve you.

This is because, every time you apply, your credit report will show the date and amount of every application.  If you have lots of applications within a short time frame, that’s a red warning to lenders and can be a reason you are declined.

So, if you have bad credit, you must properly research bad credit loan lenders and make sure they will accept your type of bad credit. Talk to them all, email them all, but whatever you do, don’t apply to them all. Apply only once.

We recommend you:

  • Find a trustworthy lender

  • Check you are eligible to apply

  • Discuss your bad credit report and:

  • Make sure you can afford the repayments (refer to your budget.)

We also suggest you read our blogs “Personal loans – why do you need to provide bank statements” and  “Got a loan application declined? What should you do next?” which both help explain what lenders generally look for, when you apply for a loan.

If you do take out a bad credit loan, this will be a great opportunity for you to make all your payments on time, which will rebuild your credit profile and help you go forward with your financial future.

A final tip on how to come back from bad credit

Our last tip is one that applies to everything in life, and that is, never give up.

Your credit report captures the last 5 years of your financial activities, after which those listing will be permanently removed.

This means, by embracing our 5 top tips to come back from bad credit, you will be able to see your credit rating gradually improve each month, and then each year.

Why is it so important to have good credit?

Well, good credit means you will have access to the lowest interest rates and cheapest services, potentially saving you thousands of dollars.

Everyone has financial dreams, such as owning a house or a brand new car, and by having good credit these will be much easier to achieve.