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

Information verified correct on February 12th, 2016

Understanding your credit rating – what it means to have a good and bad credit score and something in between. Find out how your credit rating works here. 

Every financial move you make is being watched and then recorded in your own personal credit file. This includes your repayment history, files for bankruptcy, and enquiries into your credit history when you apply for a credit product. In Australia, your credit file is put together by Veda, Dun & Bradstreet and Tasmanian Collection Service.

Your credit rating is crucial to obtaining credit in Australia. Not only should you work at keeping it in good standing, but you should be checking it regularly to ensure that there are no errors which could have a negative impact on any applications in the future.

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My Credit File/Veda

What are credit ratings?

Credit ratings are held by independent credit bureaus such as Veda, Dun and Bradstreet and Experian who provide credit scores and assessments for your financial health. Most agencies provide a free copy of your credit file, listing your payment history with lenders and lines of credit that you have applied for.

Receive a free copy of your credit file today

What is my credit history used for?

Anytime you apply for a credit product, such as personal loans, mortgages and credit cards, the lender is going to access your credit file. This allows them to see how well you have handled your finances in the past and assess whether or not you are a good applicant to extend credit to. In the credit report they are able to see all of your past financial accounts and pertinent information about them including:

  • The date the account was opened
  • The current account limit
  • The available credit for each account
  • The type of credit product
  • The payment history for each account
  • The date the account was closed (if applicable).

Why should I look at my credit history?

It is recommended that you check your own credit history periodically so that you have an idea where you would stand with lenders when it does come time to apply for a credit product. Knowing in advance whether or not you would be approved will help you in making important financial decisions now.

If you find that your credit standing is less than ideal in the eyes of a lender, you can start making steps to improve it now, before you have a dire need to apply for a new credit product. You never know when you will need emergency financing, but having the knowledge of how your credit rating is beforehand will help you in deciding which lenders are likely to extend credit to you.

What’s in my credit file?

Your credit report from Veda features information that can positively support your application:

  • Personal details. Including your name, gender, your history of residence/current residence, drivers licence details, date of birth
  • Credit applications. The type and amount of credit you’ve applied for along with any enquiries you have made in the previous five years.
  • Monthly repayment history. Shows whether you have met your repayments on time or paid the minimum amount required on your financial commitments.
  • Credit accounts. Any financial accounts which are current and open.
  • Credit Defaults. Any overdue or late account action may have been listed against your credit report.
  • Bankruptcy. Whether or not you have ever filed for bankruptcy.
  • Judgments. Your financial decisions and other general public record information.

What should I look for in my financial records?

Any mistake or error shown in your credit history can make it difficult to obtain a credit card or any other type of financing. When going through your history you should pay close attention to every line and match it to your own records. Especially look for common errors such as:

  • Outdated income information
  • Outdated employer information
  • Marks for missing repayments that you previously rectified but have not yet been updated on your file
  • Your credit rating. Up until recently, Australians did not have to worry about a credit rating or score, but with VedaScore you are now assigned a rating between 0 and 1200. Lenders do take this number into consideration, along with their own credit score that they assign while reviewing your history
  • Enquiries into your credit history that you were not aware of or did not authorise
  • Credit products that you never applied for or received. This is an indication that another individual has been using your name and information fraudulently.

Why was my application for credit rejected?

There are a number of reasons why a lender may have turned you down for a credit product. It could be that your credit history makes you appear too risky, but it could also mean that you do not meet the financial requirements for the product. For example, to be eligible for some credit cards, you need to earn a certain amount of money annually.

Other reasons your application was rejected could include:

  • Overdue accounts on your credit history
  • Credit accounts that you have defaulted on
  • Incorrect information reported in your credit history
  • Fraudulent use of your name to obtain credit cards
  • Fraudulent use of your credit cards
  • Too many credit accounts open
  • A large amount of available credit (this is typically an issue when applying for a home loan)
  • A high debt to income ratio. This shows the lender that the amount of your monthly financial obligations cannot be met by your monthly salary.

How long are defaults and personal details kept on my personal file?

Your credit report contains information that goes back for years, with how many depending on its type. According to Veda, you can expect the following information to be a part of your file for the specified amount of time:

  • Identifying information. Your personal details including name, date of birth, gender, address history and driver’s licence number will always be a part of the report.
  • Repayment history. Two years
  • Credit enquiries. Five years
  • Payment defaults. Five years
  • Overdue accounts listed as a clearout. Five years
  • Writs and summons. Five years
  • Court judgments. Five years
  • Serious overdue accounts. Seven years. This could be a foreclosure on a home loan, or a filing for bankruptcy.

How do I fix my credit file if I have bad credit?

Banks and other lenders will not typically extend offers of credit to individuals who have a bad credit rating. Some lenders may offer a loan with higher rates to compensate for the risk, or you could be forced to seek loan products through alternative lenders where the interest rates are significantly higher and the terms not ideal.

If you do have black marks on your credit file, use that time before they are erased to build a better credit file by making timely payments on all of your financial obligations and not applying for multiple credit products. Too many enquiries into your credit history does not look good to potential lenders, so it is ideal to wait to fill out applications for when you know you have a better chance of approval.

Another way to demonstrate better financial responsibility is with a savings account. Maintaining a savings account with regular deposits and few withdrawals shows that you have developed better habits while handling your finances.

What are my options if I have bad credit?

In Australia, you will be limited in credit options if your report shows bad credit. You may be able to obtain fast cash or payday loans, but these are high interest products that typically have short terms for repayment. Other alternative lenders are also available, but if you do decide to accept a loan through them, make sure that you maintain your account in good standing and that they are reporting your activity so that you can begin working on turning your bad credit around.

What happens if I have good credit?

If your credit file shows a history of excellent financial responsibility on your part, you should be doing everything you can to protect that. Don’t take advantage by opening multiple credit card accounts and loans, but rather continue to only apply for and use what you need, making regular payments whenever you can.

How can I maintain a good credit file?

The moment you obtain your first credit product, there is a credit file created in your name. In order to help keep it in good standing, you should always:

  • Pay your bills on time. Even the way you pay your household bills will affect your credit file.
  • Check your credit report yearly. This is especially true if you have upcoming plans of applying for a major credit item, such as a home loan. It is easier to fix any errors beforehand, then while in the process of trying to get approval.
  • Know your credit rating. This will help you in deciding beforehand what types of credit products you will qualify for.
  • Refrain from over-applying for credit products. Too many enquiries into your credit history is a red flag to lenders.

How to look for errors

In order to obtain a copy of your credit report, you will need to make a written request to Veda, Tasmanian Collection Service or Dunn & Bradstreet. Veda is one of the largest consumer databases, and likely to have the most comprehensive report available. Once you have made your request for a copy of your credit file, expect it to be delivered in ten business days.

Start by looking at the personal details for accuracy, as errors in name, birth date and even driver’s licence number could confuse your information with someone else’s. Also check over the address history carefully. An address you are unfamiliar with could indicate fraudulent activity using your name.

Next you should go over each listing and check for accuracy. Make notes of any errors or items which should have been removed. Once you have examined each item and listed all errors, you can contact a professional to help you in removing or changing the false information.

How to fix your credit rating

There are processes that you can follow which can help you repair your credit rating on your own. It is recommended though that you seek help from a professional if you want the optimum results. There are a lot of steps involved, including contacting lenders, gathering documentation and submitting that paperwork. The ideal thing you can do, is check your credit file, note any errors, and then contact a credit file repair specialist and provide them with all of the information they will need to fix your credit rating for you.

How often should you check your file?

You should be looking at your credit file yearly, and checking it carefully for any mistakes, before giving it to a credit repair specialist. This will help you in:

  • Getting your finances back under control
  • Obtaining better interest rates on your future loans
  • Getting a higher credit limit on credit cards
  • Qualifying for better terms on a home loan or refinance on an existing home loan
  • Getting faster approval on loan products and credit cards.

There are times when you will want to check it more often. This includes when you are:

  • Planning to make a large request for credit in the near future. If this is your year to buy a new home or refinance your home loan, you should check your credit file a few months in advance. This will give you time to clear up any errors before the lender examines your financial history.
  • Declined for a credit card. If you are checking your credit file frequently, you should have a good idea of what types of credit cards you qualify for. If you are denied for no apparent reason, you should request a copy of your credit file immediately to ensure that no mistakes or fraudulent activity have occurred.
  • Prior to a major life change. If you are getting married in the near future, you and your partner should have your credit checked before you begin pooling your finances. If one partner has bad credit, this will help you make a decision on how future financial issues should be handled.

How to check your credit file for identity fraud

Checking your credit file for identity fraud is also an important step in obtaining and keeping a good credit file.

As you examine your credit file for errors, also keep an eye out for these indications that you have become a victim of identity theft:

  • Contracts that you did not authorise, such as for mobile service
  • Enquiries into banks and other lenders that you have never contacted before
  • Black marks from creditors that you do not hold an account with.

Other signs of identity fraud that indicate a problem and should prompt you to check your credit file include:

  • Receiving bills, invoices or receipts for items you haven’t ordered
  • Missing statements from your credit card company
  • A recent loss or theft of your driver’s licence, passport or other identity document
  • Receiving notices from unknown debt collectors
  • Being declined for a credit product when you thought that your credit file was in good standing.

Identity fraud can lead to serious problems with your finances quickly if you are not diligent. The moment you suspect fraud, you should begin investigating and contacting the proper issuing creditors and authorities if necessary.

Your credit file stays with you for life, and is an important look into how you handle your finances. If you want the freedom of being able to obtain credit when you need it with ease, you should always handle your finances responsibly. You should also ensure accuracy by checking your credit report frequently,

Frequently asked questions from our users

Did the recent global financial crisis make it harder to obtain personal credit?

Yes, as a result of the crisis banks have now become more stringent about their lending policies and criteria. Having a good history of making financial repayments on time will increase the chances of your application being approved.

What does a credit file look like?

Veda has posted an example of a credit file on their website.

How much does it cost to get a copy of my credit file?

You can find all information on how to obtain your credit file from Veda via their website

If I enter into a debt agreement will that show on my credit file?

Yes, that will become a part of your credit file for up to seven years.

How do you check your credit rating?

Your credit score/ rating is determined by your credit file and financial history including current credit accounts, credit inquiries, credit defaults and monthly repayment history.

What does a credit check involve?

When an individual or business applies for a line of credit the lender will carry out a credit check to ensure you are able to meet the financial repayments. A line of credit includes credit cards and personal loans.

Can a credit repair service help me?

If you have default, debt, bankruptcy can affect your chances of being approved for a loan. To manage your defaults you can contact your credit provider to negotiate a repayment plan or consider debt consolidation. Once the debt amounts have been repaid the lender is legally required to update the listing on your credit file. However even after the debt has been cleared, default’s will remain on your credit file for five years.

Credit repair services can completely remove incorrect listings where a default has been recorded in error.

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72 Responses to Credit Ratings: What is ‘Bad Credit’ and ‘Good Credit’?

  1. Default Gravatar
    Bella | November 29, 2015

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

    • Default Gravatar
      Sarah | January 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
      Jonathan | February 1, 2016

      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
      Jonathan | November 30, 2015

      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.



  2. Default Gravatar
    Kim | October 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
      Jonathan | October 27, 2015

      Hi Kim, thanks for your inquiry!

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



  3. Default Gravatar
    jovan | October 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
      Jonathan | October 26, 2015

      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.



  4. Default Gravatar
    Sj | October 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
      Jonathan | October 15, 2015

      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.



  5. Default Gravatar
    Adam | September 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
      Jonathan | October 1, 2015

      Hi Adam, thanks for your inquiry!

      Different providers 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.



  6. Default Gravatar
    Ian | July 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
      Sally | July 30, 2015

      Hi Ian,

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

      Although most credit card providers 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 providers 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.



  7. Default Gravatar
    Ren | July 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
      Sally | July 30, 2015

      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 provider’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.



  8. Default Gravatar
    cam | July 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
      Jonathan | July 21, 2015

      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.



  9. Default Gravatar
    Curious | July 13, 2015

    Just wanting to know, i want to apply for a credit card, I have 1 paid default for and electricity bill, but I also currently have a car loan (not huge) in place. I actually want to put cash onto the credit card for an overseas trip using part my money and using part credit if need be as back up. I earn a decent wage what are my chances like

    • Staff
      Jonathan | July 15, 2015

      Hi Curious, thank you for your inquiry.

      For a list of credit cards you can use while traveling overseas, kindly compare from this page. Each of the cards pose separate eligibility requirements (including minimum income), allowing you to compare the cards you’re eligible to apply for.

      I hope this will help.



  10. Default Gravatar
    Tricky | June 27, 2015

    Hi I have come to the end of my 5 year debt agreement, all paid with no defaults. If I apply for a low interest rate credit card what will my credit rating look like to the lender? Will it show that I was on a debt agreement or will my file be wiped clean? What will my chances be in acquiring credit? Will I carry around the stigma of my past agreement for years to come?

    Thanks for your help.

    • Staff
      Jonathan | June 29, 2015

      Hi Tricky, thanks for your inquiry!

      A debt agreement may appear on a record held by a credit reporting organisation for up to seven years. In regards to applying for a low interest rate credit card, the credit history/ rating and other criteria including financial details, employment and identification will be considered in the application process. You may like to refer to the following link for more information on the credit repair process and how to get your credit card application approved.



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