What to Do If You Have a Bad Credit Score

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A bad credit score doesn't automatically rule you out of a home loan, it rules you out of some lenders, not all of them. In Australia, Equifax rates anything under 460 (out of 1,200) as "below average," and that's the point where most mainstream banks start saying no. But specialist lenders assess low-credit applications on their own merits, and if you've got time up your sleeve, six to twelve months of clean repayment history can lift your score enough to open up better options.

So no, it's not game over. It just means your next move needs to be deliberate instead of hopeful.

I have this exact conversation on repeat. Someone finds out their score is low, panics, and either gives up on the idea of buying entirely or starts firing off applications to every bank they can think of, hoping one sticks. Both reactions make things harder, not easier. There's a smarter way through this, and it starts with actually understanding your score instead of just reacting to it.

What actually counts as "bad" credit here?

Australia runs on three credit bureaus, Equifax, Experian and illion, and confusingly, they don't all score the same way. Equifax is the one most lenders pull first, and its scale runs 0 to 1,200:

0–459: below average
460–660: average
661–734: good
735–852: very good
853–1,200: excellent

Banks typically get nervous somewhere around the 500–550 mark, and under 460 is where you'll hit real resistance with standard lending criteria. If that's where you're sitting, don't panic. It just means step one is figuring out why.

Why did my score end up here?

It's rarely one big thing. It's usually a combination of:

Late or missed payments, and this now includes Buy Now Pay Later. BNPL providers started reporting to credit bureaus from June 2025, so a missed Afterpay instalment counts the same way a missed credit card payment does
Defaults, which can knock 100 to 200 points off in one hit
A cluster of credit applications and enquiries in a short window, each one logs as an enquiry and too many in a row reads as risk
Sitting close to your credit card limit regularly, rather than paying it down
Bankruptcy or a debt agreement, which sticks around on your file for a set period

The flip side is that under Comprehensive Credit Reporting, good behaviour counts too. Steady, on-time repayments actively rebuild your score now, not just stop it getting worse.

Should I check my file before I do anything else?

Yes, every time. You're entitled to a free copy of your report from each of the three bureaus, and it's the only way to know what a lender will actually see. You can request your free Equifax report here.

Errors happen more than people assume. A default that should've dropped off, an account that isn't yours, a mix-up with someone at your old address. If you spot one, you can dispute it directly with the bureau, and a correction can lift your score without you doing anything else at all.

Can I actually get a home loan with a low score?

In a lot of cases, yes, just probably not from your everyday bank. Specialist and non-conforming lenders exist specifically for this. They look past the raw number and consider your income now, what caused the hit, and how long ago it happened. The trade-off is usually a higher interest rate, and terms differ a lot lender to lender, which is exactly why running your situation across a panel of lenders (rather than one bank) matters more here than in a standard application.

Rebuild first, or apply now?

Depends entirely on your timeline:

No urgency? Give it six to twelve months of clean repayments. You'll likely land better rates and more choice
Need to move now? A specialist lender might be your realistic path, and that's a conversation worth having properly rather than guessing

Either way, get advice before you start applying anywhere. Multiple knock-backs in a short period compound the problem, since each rejected application shows up as another enquiry on your file.

Frequently Asked Questions

How long does a default stay on my file? Roughly five years from the listing date, though it varies by default type. Check the actual date on your report rather than assuming.

Does checking my own score hurt it? No. That's a soft enquiry and has zero impact. It's only a hard enquiry, logged when a lender checks you as part of an application, that shows up as a mark against you.

Do all lenders pull from the same bureau? No, and this is a big one. Different lenders check different bureaus, some check more than one, which is part of why your outcome can genuinely shift depending on who you apply with.

I need a loan soon. Should I wait or just apply? There's no single right answer, it depends on your timeline and what caused the score drop. This is exactly the kind of call worth talking through rather than deciding alone.

A low score is information, not a life sentence. Most people I talk to assume the door's shut permanently, and almost every time, it isn't. The difference between staying stuck and moving forward is usually just knowing what's actually on your file and why it's there.

Whether you're dealing with this right now or coming out the other side of it, I can walk you through your real options. Book a free call here.

Sources and References:

Equifax Australia, credit score bands and reporting guidance
Office of the Australian Information Commissioner (OAIC), credit reporting rights and file correction, referenced via Equifax's published guidance
National Consumer Credit Protection Act, Buy Now Pay Later reporting changes from 10 June 2025

Any information or advice contained on the April Six Pty Ltd website is general in nature only and has been prepared without considering your individual personal objectives, financial situation or requirements. Before acting or relying on this information, you must consider the appropriateness of this information with regard to your individual circumstances and objectives.

April Six Pty Ltd is a Credit Representative of Astute Financial Management Pty Ltd | Australian Credit Licence 364253