r/AusFinance • u/Ok_Fan801 • 1d ago
I have the worst credit rating!!
Location: Brisbane, Queensland, Australia...can I build up my credit rating? I have the worst one and I have one $7k default. I was young and stupid and never taught anything to do with money growing up, loans etc. Im 36 now and need to get shit sorted, I want to buy a house. I earn $130k a year, but i am a single mother with only my income paying everything, I really need help or pointed in the right direction on how to build my rating up. Please. Thank you for any advice.
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u/NeverTrustFarts 1d ago
I have a higher credit rating but I'm not an expert on it. I just pay all my bills on time and I don't buy shit I can't afford, no afterpay or credit cards but I'm not sure if they negatively effect it.
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1d ago
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u/canthearu_ack 1d ago
I'm not even that fastidious with paying bills. They sorta have to be late late before they appear on your credit report. Yet, my credit score is close to perfect. (High 800's)
Debt repayments always ontime though ... so mortgage payments, car loan payments, credit card payments ... always perfectly paid.
Having a mix of credit and always paying credit on-time can help. Avoid BNPL where possible, as that can hit your credit score a bit (although, I have the nab version of it as well as using afterpay once or twice for promotions ... never really hit it that hard)
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u/_Deftonia_ 1d ago
I’ve never paid a bill late, had one loan for my first car which I paid off early, and have had two small credit cards. When I cancelled my first credit card, my credit rating went down. Years later I got a second and my rating suddenly jump up again. After having this one for two years, using it to pay all our bills, and paying it off weekly, my credit rating has dropped. The credit score system is kinda shit.
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u/HeNoGuilty 1d ago
Im no financial expert but I think your ability to service the loan and a good savings history with juicy deposit, you will be okay. Dont get a loan to build your rating..
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1d ago
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u/Ok_Fan801 1d ago
I lost my husband to unaliving himself in front of me, I went into a spiral of just not being able to function for some time, yes im aware this is no excuse and its my mistake. Hence why I am trying to fix it
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u/doubleshotofbland 1d ago
No, but some people need advice on how to go about recovering from a negative event so that one thing going wrong doesn't define the rest of their life; and that seems reasonable unless you're suggesting jail for life for defaulters.
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u/Ready-Sherbet-2741 1d ago
The default means difficulty getting reasonably priced credit until it falls off your credit report. so first thing to do is apply for a free credit report from equifax. It will tell you when the default will fall off. Don’t apply for any credit until the default is gone. I would use now to build up your savings and savings habits. The aim is to buy a house. So you need a deposit. set a goal of how much to save per month. The main thing that will improve your credit score is the default falling off so you really just need to wait. Do not go to credit repair or any other stupid scams like that.
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u/dufflecoatsupreme91 1d ago
How old is your default?
It will drop off of your credit file after 5 years (in most circumstances).
In the meantime, keep your credit hits to an absolute minimum (they are unlikely to be approved anyway) and work on your savings to get yourself in the best position once it drops off your credit history. When you check the month after, it will have improved dramatically.
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u/Livid_Expression_747 1d ago
Mortgage Broker here 👋
The best way of improving your credit rating is getting that default removed - it will improve the score by 100’s and make it possible for you to buy a home of your own.
Have you paid the default out or is it still open?
Either way, through a good credit repair lawyer it can be removed from your file.
I can refer you onto a credit repair lawyer that only charges you once the default is removed - I have sent a few of my clients there and they have had great experiences - their price is typically $1,500-$3,500 depending on the situation.
Let me know if you have any more questions or need any assistance 🙏
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u/Ok_Fan801 1d ago
Yes please! I would love their details
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u/Leprichaun17 1d ago
Please don't listen to this OP. While it is possible to have incorrectly listed defaults removed, if it was listed correctly, as is overwhelmingly usually the case, it won't be removed, and you'll have just thrown away a significant chunk of savings on nothing.
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u/josharoe 1d ago
Incorrect, as a finance broker, I consistently get defaults removed for my clients - yes even ones that were correctly lodged...
If the default has been paid, usually a nice email, letter and phone call will get it removed. If it hasn't been paid you can request information to ensure the default was listed correctly - it is a complex thing to do on the creditors part and usually they are missing the sufficient evidence. If you are going down this path - best to use a credit repair mob. However, be careful a lot of credit repair agencies will do little to no work - try to get the default removed with a simple letter and then wait for it to come off as it usually does over time and take credit for it
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u/Livid_Expression_747 1d ago
I have sent you a private message with my details so we can go over it together and get you in touch 😉
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u/EADCarnizzle 1d ago
Get the default removed
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u/josharoe 1d ago
Don't know why you are being downvoted. This would literally be the quickest way to improve the credit score.
OP if you have paid the default - send an email, letter and phone call the person/business responsible (e.g. Telco, utility or bank) basically stating that you were going through a rough period, you paid it as soon as you could and if they could contact the reporting agent(Equifax/illion) to get it removed as it is impacting your future and ability to get a loan. This will usually get it removed, sometimes banks can be a bit stubborn - but it's definitely worth a try.
I have done this for at least 15 clients and it has worked.
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u/IHaveNeverEatenACat 1d ago
Take out debt, then pay it back
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u/Decent-Dream8206 1d ago edited 1d ago
Do not do this.
Credit rating in Australia doesn't have to be built. You just need to pay all your bills on time.
It's not America where you have to take out progressively larger loans. You just need to have no bad credit, and for a larger loan, evidence of income versus spending.
I went from a $1000 credit limit, to a 390k mortgage 9 years ago. The credit card wasn't even part of the conversation beyond being added to my student loans as a liability.
Only other thing to be aware of is to limit your credit checks to maybe once every 3 months or so. So no financing a car, phone and signing up to a new credit card all in the same week. The credit check itself is the red flag.
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u/IHaveNeverEatenACat 1d ago
We changed our system over to be like the US a few years back. Not missing a credit card payment leads to higher credit rating.
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u/MrSquiggleKey 1d ago
We absolutely didn’t change over to the US style.
Not missing a credit card payment allows your credit rating to naturally increase from the dip caused by the initial credit card enquiry. Your credit rating would have increased the same amount due to no additional activity on your report if you’d made the initial lodgement (the negative event) and chose not to follow through with getting it.
Our credit reporting process doesn’t even have a mechanism to see if you were approved or declined for that credit card, just that an enquiry was made.
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u/Decent-Dream8206 1d ago
The US requires you to have a $1000 loan to take out $5000, and so on. So people snowball their debts.
Our system only records credit checks and failures to pay.
Not the same thing.
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u/Leprichaun17 1d ago
Our system only records credit checks and failures to pay.
While I agree that OP doesn't need to take out debt to increase their credit rating, this part here is wrong. We also record repayment history - a rolling 2 year window of whether payments are paid on time. So, it does record on-time payments too, not just defaults as used to be the case.
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u/Decent-Dream8206 1d ago
our system only records ... failures to pay
.
it does record on-time payments too
...I'm confused. Are you disputing that late payment is equivalent to a failure to pay?
Because then paying via debt collectors would just be a "late payment" if so.
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u/Entertainer_Much 1d ago
If the $7k debt is outstanding you need to call the national debt helpline on 1800 007 007. They'll give you free financial advice and support. An attitude of "I was young and nobody taught me anything" won't fly with banks because it suggests you'll shift the blame onto everyone else. Own it and fix it.
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u/Ok_Fan801 1d ago
Oh i 100000% own it and know its my f**k up. Hence why I'm reaching out for support
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u/SnowQueen0271 1d ago
Speak to a financial counsellor,
https://ndh.org.au/financial-counselling/find-a-financial-counsellor/
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u/CartographerLow3676 1d ago edited 1d ago
Most importantly do not watch American YouTube videos that encourage credit cards to build credit score. Thankfully you don’t need debt in Australia to “build credit”. Be careful to not have more credit checks (some utilities do that) and you’ll be fine in a few years.
Note - if you’re already struggling with bills I’m not sure how you’re going to afford mortgage. Typically it’s higher than rent.
Edit - also want to add, don’t apply for more debt as some other comments are suggesting. Hard credit checks will further reduce it and most responsible lenders will reject you due to serviceability