6 Tips for People With Bad Credit to Get Good Credit

By Angela Monroe - April 17, 2019

When you apply for a loan, lenders assess your creditworthiness (ability to repay a debt) and credit rating before deciding whether or not to give you the money. This rating is based on your income and debt history. You need to follow some tips to get a good credit score before applying for one.

If you have a good credit rating, you can easily get loans at moderate interest rates. If you have a bad credit rating, however, you might struggle to secure financing and if you do get a loan, you’ll likely be paying a high interest rate. This is because you are considered to be a high-risk borrower who may default or delay on your loan payments.

Fortunately, having a bad credit rating is not permanent. Here are steps you can do to improve your creditworthiness and rebuild good credit:

1. Review your bad credit reports and dispute any errors.


To get a copy of your credit report for free, contact a credit reporting body (CRB). There are three major CRBs operating in Australia, including:

  • Equifax Australia (formerly known as Veda)
  • Illion (formerly Dun & Bradstreet)
  • Experian

You can get a copy of your credit report once a year and at any time under the following circumstances:

  • Have applied but been refused credit within the past 90 days
  • Need to correct information in your credit report, as recommended by a CRB or a credit provider

Expect your free credit report within 10 days of your request. If you want an earlier time than this, you will need to pay a charge.


Check your credit reports for any errors. Not all of your credit information may be reported to all three CRBs. Thus, your credit report from each CRB may vary depending on the information supplied by lenders, collection agencies and court records. It usually takes around 1 to 2 hours to review your credit reports from all 3 CRBs.


If you find errors in your credit reports, draft your disputes and gather all the supporting documents needed. Then, submit your dispute letter along with the supporting documents to CRBs. You can either do this on your own or hire a credit repair service to expedite the process. Your letters are best sent by registered mail so you have proof of the delivery date.

Upon receipt of your dispute letters, the CRBs have 30 days to contact the creditors to verify the information and respond. The CRBs must respond to your inquiry after this period. In some instances, they may request more documentation to verify or reject your dispute.

2. Catch up on your debt payments.

Past Due Debts

Try to pay all your old and past due debts. If this is not possible, contact your creditors and suggest payment plans that you both can agree on. Let them understand your current financial situation, especially on how much you can pay and how long you expect to pay it. Most importantly, assure them of your keenness to pay your obligation. You can always work out an arrangement when you’re upfront with your creditors.

If they refuse to work out an arrangement, however, seek the services of a legitimate credit counselling agency to manage your debt and discuss a payment plan with your creditors.

Credit Utilisation and Ongoing Debts

Credit utilisation greatly affects your credit rating. It is a measure of how much debt you have and expressed as a portion of the available credit you are using. If you are using $10,000 out of your total credit availability of $20,000, your credit utilisation is 50%.

Settle several ongoing debts by cutting down on your expenses and allocating more money to debt repayment. When you reduce your debt, your credit utilisation will improve, helping your overall credit score.

Finance experts recommend lowering your credit utilisation to 30% or less.

3. Pay bills on time.

Payment history is an important factor in determining your creditworthiness. Thus, establishing a pattern of making on-time payments is essential to rebuilding your credit.

Pay your bills on time, including non-credit bills such as utilities and rent. Missing out or habitually paying late on these payments can be reported to CRBs. To avoid missing payments, consider setting up automatic bank payments for your bills and credit cards.

4. Avoid cancelling your credit cards.

Unless you are very far behind in your credit card debt payments and your payment plan requires you to close your credit card accounts, do not do it. Using credit cards establish your credit history. The longer your credit history, the better your credit rating.

If a bad credit situation has left you without any credit cards, try to get a new one. Use it the right way to establish a positive payment history and build a better credit score. If you don’t get approved for a regular credit card, get a secured credit card. This type of credit card is backed by a secured deposit, which serves as collateral should you default on your payments.

However, avoid subprime credit cards that prey on people with bad credit. These cards have high interest rates and high fees, making credit unaffordable and sending you back to debt woes. Using a prepaid credit card can’t also help rebuild your creditworthiness simply because it’s not a credit card. It is not linked to a credit line and its transactions are not reported to the credit bureaus.

5. Get an instalment loan.

Try to get an instalment loan, like a car loan or home loan, if you can obtain one. Loans For People With Bad Credit can help you find the best instalment loan fast with its access to dozens of premium lenders. This type of loan has a set term and a set payment. This will show diversity in the loans you have, which helps your credit score.

Because of your bad credit rating, your small loan will probably have a relatively high interest rate. Thus, it’s best to get a small, low-balance instalment loan to keep the loan term short. Avoid applying for too many loans as it can damage your credit rating further.

6. Develop Good Financial Habits

After practising good credit habits, it can take around two to three months to see improvement in your credit score and around two to three years to experience solid improvement, depending on how bad your credit history is.

During this rebuilding period, it’s essential to practice good financial habits to reduce your chances of falling into a poor credit level again in the future. These habits include living within your means, budgeting and regularly setting aside money in your emergency fund.

Rebuilding your good credit rating does not happen overnight, but if you keep at it, you will be rewarded with a high credit score that gives you comparatively low-interest rates on loan applications, fast approval and flexible repayment options.


Loans For People With Bad Credit offers bad credit loans for Aussies nationwide. Call us on 1300 769 384 to get you the loan you want and fix your credit history.

Angela Monroe
Angela Monroe is the Community Manager at The Positive Group, specialising in giving people the information that they need when they need it, and putting you on the path to a fair financial future. She has 8 years of experience in helping Australians find the right finance solutions, and regularly contributes articles to empower Australians with the knowledge they need to become financially healthy.


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