Australia Bad Credit Duration? How to fix it.

In Australia, bad credit how long does it last? 

What needs to be done to fix it. It can feel like a death sentence if your credit score is preventing you from accessing the money you desire or need.

Unfortunately, bad credit does not last a lifetime in Australia. There are steps you can take today to boost your credit score and ensure a quick recovery.

You can find out more information below, including our best tips to repair your credit score.

What does it mean to have ‘bad credit?

Before we get into how you can fix your bad credit, let’s first look at what bad credits actually mean.

Credit reports are a means of proving your creditworthiness to borrow money from a lender in Australia. These reports provide information about your credit history to potential lenders. This helps them determine whether you are high risk or low-returning.

There are many credit agencies in Australia. But, three of the biggest (Equifax and Experian) agree that a low credit score, also known as your credit rating, is one that’s between 0-500. A score of 600 or more is usually considered good credit. Most agencies assign 1000 as the highest rating. However, some agencies may go as high as 1200.

There are many factors that can influence your credit score. Poor credit scores are often the result of inaccurate credit information.

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You have not had a credit card or credit account in the past.

• Credit products can include credit cards, mobile phone plans, personal loans and credit cards. It’s not necessarily a bad thing to have never had a credit account or product. A credit provider can’t see your ability to repay the money you borrowed.

In a short amount of time, you apply for too many credit inquires

• This could make you appear to be living beyond your means and irresponsible with money.

Any unpaid debt or payment default

• If you’ve missed more than $150 in payments and they’re not paid within 60 days, they might be added to your file as an overdue loan.

Bankruptcy and court judgments, or agreements regarding debts

• If debt becomes too much, many people turn to help and intervention. For example, if you have a debt agreement or are facing legal proceedings regarding your debt repayment (called a court judgment), this can seriously impact your credit score.
• The National Debt Helpline is a resource that may help you if your financial situation has become difficult. The helpline can help you get free financial advice to help you feel more in charge of your finances.

How long can a bad credit rating last?

Bad credit can stay around for a while depending on what caused it. Your credit score could be affected for up to ten year depending on which agency you use. This doesn’t mean you won’t have poor credit ratings for the rest of your life.

Here’s how long you can keep different information in your file.

Two years maximum

Your file will contain information about your repayment history for up to 2 years.

Five to seven year period

Even if you have paid off an overdue loan, or missed repayments, it could still remain on your file for five to seven more years. Information relating to credit card, personal loan, home loan, or credit card applications can also be retained on your file for approximately five years.

You can keep your house for up to 10 years

Credit reporting companies may keep your file for up 10 years in the event of personal bankruptcy, serious credit infringements, or personal insolvency. This can make credit repairs difficult.

How can I improve credit?

There is no quick fix for bad credit, but you can make steps to restore your credit rating.

Free credit score report

First, you must identify the problem to be fixed. Every credit agency must provide you with a free copy once every three month. Sometimes inaccurate credit provider information can cause a bad credit score. To identify errors in your credit report, call the company that manages it.

Pay your bills on-time

Your loan repayments or credit card debts are not all that you have to pay. You also have to pay utility bills, such as phone, internet, and electricity bills. Avoiding a bad credit score can be as simple as paying your bills on time.

Make a payment plan

It is important to start credit repair early to avoid things spiraling out of control. Nearly every service provider or creditor will want to meet with you and work out a payment plan, before sending your account off to a collection agency. By showing financial responsibility and getting on the front foot, you can avoid credit infringements or pay additional fees or penalties.

Minimise your credit enquiries

Every time you apply to credit, a credit reporting agency will log it. It doesn’t matter if your application is approved or declined. And, it doesn’t matter if the product is actually purchased. Multiple declined applications, and multiple applications can all have a negative effect on your credit rating.

• Top tip for reducing credit limit

It’s worth thinking twice before accepting credit card limit increases from your bank. Excessive credit limits can limit your ability to borrow money other than for business loans.

• Did you know

A credit score can be damaged by identity theft. You should always be suspicious of anything on your credit report. Criminals can give you a bad rating.

Do all credit providers look at credit reports

To assess your application for credit, most Australian credit licence holders will look at your credit report along with other lending criteria.

Disclaimer:

You should consider seeking independent legal, financial, taxation or other advice to check how the information relates to your particular circumstances. We do not accept responsibility for any loss arising from the use of, or reliance on, the information.