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Do you want to take out a mortgage but are affected by bad credit?

Are you facing financial difficulty like in one or more of the situations below?

  • Over the past 12 months, your household income has been lower than your expenses.
  • You would find it very difficult to raise $2000 within a week for an urgent or unexpected cost.
  • It difficult hard to pay gas, telephone, electricity and other utility bills on time.
  • You have been late making payments for car insurance and registration.
  • You have had to pawn or sell belongings in order to make ends meet.
  • Heating your home sufficiently is beyond your budget.
  • You need help from friends and family members.
  • You have needed to seek assistance from community welfare organizations.

Bad credit is a red flag to many financing facilities - it can label you as a high-risk client. In this scenario, you will need to know your options and how you can still secure the best rates for your bad credit home loans. If you need our help and are from Melbourne, Australia, feel free to give us a holler. Call 1300 992 260 or email [email protected]

Otherwise, read on... 🙂

A bad credit mortgage can help you overcome the barriers that your bad credit creates. You can still be owning a new home or property!

What Can You Find on a Credit Report?

What Can You Find on a Credit Report

How do creditors know you have a black mark on your history? The answer is simple - your credit report.

This report allows creditors to assess your financial health. It includes these items:

  • Personal information. This includes your name, address and address history, employment history, and driver’s license number.
  • Credit inquiries from lending facilities you applied to for a loan. This could include mortgage companies and car loan companies.
  • Monthly repayment histories on credit and mortgage accounts.
  • Consumer credit liability history. This could include current accounts and closed accounts.
  • Details of any overdue accounts you have.
  • Public records information. Bankruptcy, court judgments or directorship details are some examples of the information listed publicly.

Bad Credit Defined - What Goes In Your Credit Report?

Bad Credit Defined

Bad credit is a catch-all term for issues on your credit history. Here are some of the most common issues that might appear on your credit report and what they mean.

Payment Default

You will receive this rating when a company has sent you a Notice of Default. This will stay on your file for five years from the listing date.


This is a more serious form of default which occurs when creditors are unable to contact you for a period of six months. In this scenario, creditors might conclude that you have deliberately avoided repaying the loan. This notice stays on a person’s credit report for five years.

Serious Credit Infringement

This is when creditors believe the debtor cannot pay and that some form of fraud or negligence led to the approval of the loan. This notice also stays on a credit report for a period of five years.

Status: Unpaid

This refers to an overdue account which is still outstanding. The remark changes to 'Status: Paid' when the debt is paid in full. The remark becomes 'Status: Settled' if the creditor agrees to a reduced payment.


This happens when a company decides to use the legal system to make you pay. A court will make a determination of what is owed and how the debt can be enforced; this record will stay on your file for seven years.

Debt Agreement: Part IX of the Bankruptcy Act

If you file for bankruptcy and the creditor agrees to collect a lower amount than your original loan, this remark will appear on your history. The payment term can be between two and four years. After five years, the remark will be updated either to confirm your ‘Discharged’ status or ‘Not Discharged’. If your status remains undischarged, you will still be unable to obtain further credit. The National Personal Insolvency Index will list the details and the debt agreement for five years.

Personal Insolvency Agreement: Part X of the Bankruptcy Act

This appears when you file for bankruptcy, and you appoint a trustee to manage your debts. Just like entering into a debt agreement, details will appear in the National Personal Insolvency Index for five years.

A sample credit report looks like this.

How do You Know if You Have Bad Credit?

How do You Know if You Have Bad Credit

If you want to assess your credit score, it is possible to obtain details of your credit history. A person’s credit rating ranges from 0 to 1,200, with higher scores reflecting a better credit history.

A score of 509 and below is considered to be below average, while a score of 510 to 621 is the average. Scores of 621 and below are indicative of a poor credit history.

Ratings of 622 and 725 are considered good, while scores between 726 and 832 are very good. Those who score 833 and above have excellent credit scores.

You can obtain your credit score from OAIC here.

8 Common Financial Stress Indicators Lenders Look Out For

What are Common Financial Stress Indicators

If you have been refused a mortgage, it could be due to the top 8 reasons below.

1.You Want to Borrow Too Much Money

It is common to take out a loan equal to 95 percent of the value of the property. However, some lenders will still hesitate to agree to a high value loan. Having a guarantor to secure the mortgage or raising a larger deposit might strengthen your application.

2.Bad Credit History

If you have a history of bankruptcy or several defaults on your file, a bank is likely to view you as a high-risk client. Loan applicants with a Discharged Bankruptcy status can take out a loan but their choices may be limited so they will need to shop around for the best rates.


Lenders are unable to approve loan applications if an individual is not in employment. This requirement is a legal obligation set out in The National Consumer Credit Protection Act of 2009 and creditors have no discretion in applying this rule.

4.The Applicant is Under 18 Years Old

Creditors may only lend to people aged 18 and over. In addition, people aged between 18 and 23 are also likely to encounter difficulties, since their credit histories are limited and provide little evidence of whether they are likely to be able to repay a loan.

5.The Applicant is Over 45 Years Old

It is not only the youngest applicants who encounter difficulties related to their potential credit risks. For people who might be planning to retire during the loan period, lenders will need to know how you will make repayments when you are no longer working.

6.The Applicant has worked for less than a year in their current job or has been self-employed for less than two years.

Some lenders employ strict rules which can make it hard to take out a loan unless you have been employed for more than a year or you have been self-employed for at least two years and can provide evidence of all income during this period.

7.Poor Spending Habits

Credit facilities look into a range of available information about you. If they see that you have substantial outgoings, it may count against your perceived capacity to pay.

8.Too Many Loan Applications

If over the past six months two or more inquiries appear on your credit report, it is often seen as a red flag.

In all of these cases, it is helpful to have a reliable mortgage broker who knows how the credit assessment evaluation process works. This way, you will know the best options available in your situation. He/she will be able to shop around for better rates and improve your chances of securing a home loan.

What is a Bad Credit House Loan?

Most people do not have enough savings to buy a home without a substantial loan. Many people are affected by financial difficulties they have encountered which have impacted on their ability to meet payment obligations. It is important to know what steps you can take in order to mitigate the impact of these difficulties.

Paid Defaults and Unpaid Defaults

A default rating is a red flag on your credit file for potential lenders. However, it is still possible to take out a home loan with a history of defaults, especially if you are able to explain the circumstances surrounding the default.

Creditors look more favorably on applicants who have made efforts to pay previous defaults and it may still be possible to obtain a bad credit house loan if previous liabilities have been settled.

Discharged Bankrupt

Discharged Bankrupt

Three years into a bankruptcy period, a person’s status will be amended to ‘Discharged Bankruptcy’. This will lift restrictions on your assets and allow you to take out a home loan.

When applying for home loans in these circumstances, there may be higher eligibility requirements from you. For example, instead of the usual five to ten percent initial deposit, lenders might request that you provide a deposit of 20 percent.

Part IX Debt Agreements

Applying for an Interest only Loan

In a Debt Agreement, individuals are required to pay less than the original amount they owed. A notice of this agreement will appear on your file for five years.

It is prohibited to take out a loan during the payment period, which usually lasts from two to five years. After paying off the loan, it might then be possible to apply for a new home loan.

If you have a valid reason for entering into a debt agreement and you have made all payments on time, you will have a better prospect of securing affordable rates. Bad credit mortgage brokers can help guide you through the process and choose a loan that is right for you.

Tax Debt

It is possible to take out a home loan even if you have outstanding debts with the Australian Tax Office (ATO). When applying for a loan in these circumstances, you will need to provide proof of income, and it is important to ensure that you are able to keep up payments on your tax liabilities. It is important to set up a payment plan with the ATO and maintain communication with them in the event of any difficulties, otherwise the agency may refer your tax debts to the courts for formal enforcement.

Debt Consolidation

Do you have several credit cards and personal loans? The combined interest on these loans can be very high and it might be beneficial to apply for a loan with banks that will refinance with bad credit. Doing this could ease your financial burdens if you refinance your personal loans and credit card debts as well as consolidate your payments into a single debt.

Non-Conforming Lenders: Hope for Better Rates for Home Loans for Bad Credit

If banks say no to your loan application because of black marks on your credit history, non-conforming lenders can assist you. These creditors extend loans to:

  • Borrowers requiring structured or specialized loans
  • Migrants who have recently arrived in Australia
  • Casual or seasonal workers
  • Bad credit borrowers
  • Postcode restricted areas

Lending rates can be between one and five percent higher than banks for people who are applying for home loans with a bad credit situation. However, for individuals with stable income streams and valid reasons for having bad credit, rates can be higher by only 0.1 to 0.5 percent when compared to a regular loan.

Entry fees and exit fees can also be higher for bad credit loans.

Busting Bad Credit Home Loan Myths

Having a poor credit history does not automatically mean that you will be unable to obtain a home loan. Here are some common myths:

  1. Getting a loan is impossible when you have bad credit. Nope, it is possible to take out a loan and you may be able to obtain a loan with reasonable interest rates similar to those with a regular loan.
  2. People with default payments are the only ones who take out bad credit home loans. People are rejected by standard lenders for a variety of reasons, not just bad credit, and so these people take out a bad credit home loan.
  3. Bad credit history means higher interest rates for the duration of the loan term. Most bad credit remarks are recorded on a credit history for a period of five years. When this period expires, you can ask for better rates if you maintain a good repayment history for a period of six to twelve months.
  4. All defaults are regarded as the same, and lenders don’t take into consideration the value of the default. Contrary to popular belief, lenders will consider the amount involved in the default and how recent it was. If defaults have been settled, lenders will look at the application more favorably.
  5. Lenders don’t care why you are in debt. Credit facilities understand how a person’s financial situation can change suddenly. If you have a valid reason for getting into debt, you may still be able to obtain good rates.

Bad Credit Home Loans for First Time Buyers: What to do with Black Marks on Your Credit File

Bad Credit Home Loans for First Time Buyers

You have your credit report, it sucks... And you want to obtain a higher score to get better rates for bad credit home loans as a first-time buyer. What can you do?

  1. Firstly, you need to check and verify the accuracy of all negative listings.
  2. Report all incorrect listings to the consumer credit agency and ask for the removal of those items.
  3. Get in touch with your creditor and try to negotiate terms.
  4. While focusing on credit repair, pay all your installments on time to avoid getting more negative listings.
  5. Consider the services of a credit repair specialist.
  6. Wait for listings to expire before applying for a loan.

A default brands a debtor as high risk since it can suggest that a person won’t be able to make payments on time. Here are 2 additional but super duper important tips.

Credit Cards

Credit Cards

Defaults on credit card payments are a common issue on credit reports. Get in touch with your credit facility and try to resolve any issues. Pay off credit card debts as soon as you can. Creditors look favorably on defaults that have been paid. You can use a bad credit home loan calculator to help you work out how much you may be eligible to borrow.

Telco Bills

Unpaid phone bills can also have an impact on your credit history. Some people are rejected when they apply for a loan because of a default listed by their phone provider. It is advisable to contact your service provider to try and resolve any payment issues as quickly as possible.

If there has been a mistake, you should bring it up with the company or file a complaint. If the default is accurate, remember that paid defaults look better on your credit history than unpaid defaults.

For both credit cards and telco bill defaults, you can include an explanation letter with your loan application detailing the reasons for the default to assist in your loan application. The borrower who reviews the application is likely to be more convinced if you also provide evidence.

You Have Come To The Right Place If You Are/Have...

Mortgage with Poor Credit History No Problem

Been Declined a Home Loan Due To Bad Credit? We Are Here to Help!

Bad credit should not ruin your chances of obtaining home loans with the best interest rates. We will negotiate on your behalf and do the legwork to find the best lending rates for you.

Mortgage with Poor Credit History? No Problem

Having a bad credit history can be frustrating. Part IX, Judgments, Bankruptcy, Defaults, and Loan Arrears can be major red flags on your credit history. We have a network of lenders who can provide loans at an affordable rate if you’re looking for a mortgage with poor credit.

Credit Impaired? Here’s Our Deal

You can still take out a loan if you are just retired or recovered from an illness or unemployed. You can leave the process to us and we will select the best loan providers for you and your unique circumstances.

Improving Credit Rating

Our job doesn’t end with shopping for the best rates. We want you to be financially free and our advisers will help you find the best approach to your debt problems and assist you in finding ways to reduce your debt.

Look Forward to Friendly Interest Rates

Don’t let a bad credit history weigh you down. We will shop for more reasonable lending rates and help you at every stage of the application process.

Curious to Know More About Bad Credit Home Loans? Contact Us Today

Contact Us Today

Having bad credit can be frustrating and we will give you all the support we can. We will handle everything from the initial application to the loan negotiation. We will guide you in the process of obtaining the best bad credit home loan rates in Melbourne. 🙂

Request a credit report for free. That's where you'll start.


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1300 992 260

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Christopher Berry -  Mortgage Broker Melbourne - Find A Better Rate is a credit representative (389328) of Find A Better Rate Home Loans ABN 32 170 846 529 (Australian Credit Licence 389328)

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