How long does it take to fix a poor credit score?

Sub Editor · 2 December 2020
Whether you want to secure your first home, purchase a car or seek finance for a different reason, having a poor credit score can impact whether you get approved, and the interest rate that applies.

So, how long does it take to repair your credit score and credit rating if you need to, and what can you do to improve it? We cover:

→ You can check your credit score for free

What is a credit score and credit report?

Your credit score is a number that reflects the financial history listed on your credit report – including times you’ve missed bill payments, made applications for credit, or defaulted on a loan. Your credit score is important if you want to buy your first house, need a car loan or are applying for a credit card or personal loan, for example.

Australia introduced Comprehensive Credit Reporting (CCR) in July 2018. This means that as well as negative actions, positive behaviours, such as paying your bills on time, are also listed on your credit report and may factor into your credit score.

How do lenders use my credit score?

When you apply for credit or a loan, your credit score can affect the approval process, giving lenders an indication of your creditworthiness. Banks and other lenders may look at this information to help them determine whether they will lend you money, how much they will lend you and sometimes the interest rate you will be offered.

A low credit score suggests that in the past you may have had difficulties paying back what you owe on time, and the lender may decide not to lend to you, or they may charge you a higher interest rate than someone with a better credit score. A low credit score could also simply mean that you haven’t had a credit product before.

While some lenders may look at all the past activity in your report, others may be most interested in your recent actions (in the last one to two years, for example). As a result, having a recent history of making payments on time could be particularly important.

Everyone’s financial situation is different, and your credit score isn’t the only thing a lender will take into account when deciding whether to approve you for a loan or other type of credit.

Lenders generally do not disclose how they do credit checks. So, you may want to confirm your credit score with more than one credit agency, and ensure information on file for you is correct.

What is a bad or poor credit score?

In Australia, credit agencies including Equifax, Experian and Illion provide credit reports and credit scores. There may be slight differences in your credit score with each agency, and they are used by different lenders.

The credit score bands used in Canstar’s free credit score tool are from Equifax:

  • Excellent: 1,200 – 841
  • Very Good: 840 – 756
  • Good: 755 – 666
  • Average: 665 – 506
  • Below average: 505 and below

A credit score band of “below average” means you are in the bottom 20% of the credit-active population and are more likely to have an adverse event in the next 12 months than the wider population, on average. A credit score band of “average” means an adverse event is likely in the next 12 months when compared to the wider population.

For Experian, scores are ranked from 0 to 1,000. A Below average score that is likely to be considered poor by a credit provider ranges from 0–549. A Fair score, which is still below the average, ranges from 550–624.

For Illion, scores are also ranked from 0 to 1,000, with a Zero score indicating there’s something negative in your credit history, such as a court judgement or bankruptcy; a Low score of 1–299 meaning you are likely to have some negative data on file; and a Room for improvement score of 300–499 implying your score still requires some improvement.

credit risk rating concept

Photo: Valiantsina Halushka (Shutterstock).

How long does a poor credit rating last?

Your credit rating, or credit score, is based on the information shown in your credit report at a given time. Equifax gives the following timeframes for how long different kinds of information may stay on your credit report:

Two years Five years Seven years
  • Repayment history information
  • Any credit enquiry
  • Overdue accounts listed as a payment default
  • Overdue accounts listed as clearouts (where you can’t be contacted, a lender can immediately list the debt as a clearout and does not need to wait 60 days)
  • Writs and summons
  • Court judgments
  • Overdue accounts listed as a serious credit infringement

Source: Equifax 

With bankruptcy, debt agreements and personal insolvency, when you enter into an agreement and when it ends can affect how long the information is kept on file. For example, Experian says a bankruptcy will remain on your credit record for five years from the date of listing or two years after discharge, whichever is greatest.

If you pay an overdue debt, it will still generally be listed on your credit report for five or seven years (depending on the type of overdue debt). However, your credit report will be updated to show you have made payments, which could help your score start to improve.

Credit repair: How can I fix my credit score?

You cannot change or remove information on your credit report that’s correct, even if it’s negative, according to Moneysmart. But, you do have the right to request that errors are fixed. This is a free service you can organise by contacting the relevant credit agency.

What you can request to have fixed includes:

  • Credit reporting agency errors. Examples:
    • your name, date of birth or address needs updating
    • a debt is listed twice
    • the amount of a debt is wrong
  • Credit provider errors. Examples:
    • incorrect information about payments (e.g. that a $200 payment was overdue for 60 or more days, but it wasn’t)
    • failing to let you know about an unpaid debt
    • listing a default (an overdue debt) when you are in dispute
    • not showing if a payment plan is agreed, or contract terms are changed
    • mistakenly creating an account, or having one as a result of identity theft

Source: Moneysmart.

You can receive a free copy of your credit report once a year from credit reporting agencies such as Equifax and Experian. Separately to your credit report, you can check your credit score regularly and for free. Checking your credit score or report will not have a negative impact on your credit rating.

Moneysmart recommends being wary of paying credit repair companies that claim they can ‘clean’ your credit report and have details removed. This may not be true. The Consumer Action Law Centre says that people who use these quick-fix companies could end up receiving inappropriate debt solutions and paying high or hidden fees.

How can I improve my credit score?

If you want to repair or improve your credit score, keep in mind that doing so generally won’t be a quick and easy process. It may take a significant amount of time and require an extended period of financial responsibility on your part.

  1. Pay your bills on time
  2. Think carefully before applying for any new credit
  3. Pay down any existing loans and debts
  4. Consider seeking the assistance of a financial counsellor
  5. Check your credit report for any inaccuracies
  6. Hold onto credit cards you can manage
  7. Lower the limit on any credit cards you have

Can I borrow money with a poor credit rating?

If your credit score is holding you back, you may want to think about taking proactive steps to repair it, and consider waiting until your credit report has improved before applying for new credit cards or loans. If you have a poor credit rating, having a loan application declined could potentially harm your score further.

There could still be options for you, however, if you need a little extra cash flow and want to get a credit card or loan while your credit score is low, as long as you’re prepared to show that you can meet the conditions of a particular loan or card.

Doing your research – including on fees, interest rates, contract terms and the risks that apply – is important to help you decide if a credit or loan product is right for you. There are some programs, such as the Australian Government-supported No Interest Loan Scheme (NILS) and Household Relief Loans that you may be eligible for if you are struggling financially.

At the time of writing, the Federal Government is planning to reform responsible lending laws in Australia to reduce “the cost and time it takes consumers and businesses to access credit”. The changes, announced in the government’s economy recovery plan, have been widely criticised by consumer groups.

Payday loans, in particular, are generally more expensive and riskier than traditional personal loans, and can come with “a lot of fees”, according to the Australian Securities and Investments Commission’s (ASIC’s) Moneysmart. In 2019, ASIC intervened to ban short-term credit providers and their associates from charging fees that exceeded prescribed limits for regulated credit, because of “significant consumer detriment”.

Where can I get free financial counselling?

If you have a bad credit rating, or are even in financial hardship (which is when what you spend exceeds your income over time) you might also be interested in seeking support from a qualified professional.

Free financial counselling and support is available for all Australians from the National Debt Helpline (NDH). As well as running the helpline itself (1800 007 007), NDH helps consumers find individual counsellors and organisations near to them.


Cover image source: VectorMine (Shutterstock)

Co-written by Tim Smith. This article was reviewed by our Finance Editor Sean Callery before it was published, as part of our fact-checking process.

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About the author:


Jacqueline Belesky is a Sub Editor at Canstar. She brings over 15 years of experience in corporate communications, media and publishing and holds a Bachelor of Journalism (Distinction) from Queensland University of Technology and postgraduate qualifications in Writing, Editing and Publishing from the University of Queensland. Jacqui was previously a Global Content and Media Manager for ABB in the UK and in Oslo, Norway, and has worked in Australia as a journalist for News Corp and editor for the Queensland Government, John Wiley & Sons and the University of Queensland. Jacqui’s articles have been published in The Courier-Mail, The Gold Coast Bulletin and on She also brings experience managing the editorial production of annual reports, financial statements, research papers and supplements on topics such as business sustainability and the global financial crisis. You can follow Jacqui on LinkedIn and Twitter, and Canstar on Facebook.

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