Can You Get a Home Loan With Bad Credit When You're Self-Employed?
Home Loans
Guide · Credit reports · Self-employed home loans
A default, arrears, a judgment or a past bankruptcy changes who will look at your file and what you have to evidence. For a self-employed borrower there are two separate questions: how your income is proved, and how your credit has been conducted. This guide shows what each credit event does, how long it lasts, what happens when both problems exist together, and the path back to mainstream lending.
Quick Answer
Yes, in many cases. A lender assesses two things separately: the credit event itself, including what is listed, how old it is and whether it is paid, and how you prove self-employed income. If both are difficult, the lender and evidence have to fit both problems at the same time.
Also called: a bad credit home loan, a credit impaired home loan, a non-conforming home loan or a specialist home loan. "Bad credit" describes your file; "non-conforming" and "specialist" describe the lender's product grade. A low doc or alt doc home loan is not the same thing: that describes how your income is proved, not how your credit has been conducted.
Start with where you are right now
Find out why before you apply anywhere else.
If a lender refused you partly because of your credit report, it must give you a written notice naming the credit reporting body it used, and you can get a free copy of your report if you were refused credit in the past 90 days. Every new application adds an enquiry that stays for five years, so read what a decline does to your credit file and how long to wait before reapplying before you try again.
First step: ask the lender for the reason in writingCheck that it is correct, then check its date.
A default stays on your report for five years whether or not you pay it. If it is wrong, correcting it is free and you do not need to pay anyone. If it is right, what a lender reads is whether it is paid, how old it is and your explanation, set out in how lenders treat a paid default against an unpaid one.
First step: get your report from both credit reporting bodiesWhile bankrupt you must disclose it; once it ends, nothing stops you applying.
During bankruptcy you must tell a credit provider you are bankrupt if you apply for credit over a set amount. After it ends there is no restriction on applying for a home loan, but a trustee's interest in property can outlast the bankruptcy. See what happens during and after bankruptcy.
First step: speak to your trustee before you make an offerYour home loan is not part of the agreement.
A Part IX debt agreement covers unsecured debts, so a mortgage lender keeps its security. The agreement stays on your credit report for the later of five years from the day it was made or two years from the day it ended, as set out in the bankruptcy and debt agreement table.
First step: confirm the date your agreement endsAsk your lender for hardship before anything else.
Hardship information stays on your report for one year, the shortest of any listing, and a lender must give you a default notice allowing at least 30 days to fix a default before it enforces. A free financial counsellor through the National Debt Helpline can help. See what protections apply.
First step: call your lender and ask for a hardship arrangementCan you get a home loan with bad credit when you are self-employed?
Yes, in many cases. A credit event changes the grade of lender that will assess the file, usually a specialist or non-bank lender, and the evidence that lender needs to see, not whether a home loan is possible. The useful question is which lender and on what evidence.
Lenders describe their credit tiers with terms such as near prime, specialist and no credit scoring. Some non-bank lenders publish broker-facing credit policy guides that set out, tier by tier, the mortgage arrears, defaults, judgments and time since a discharged bankruptcy each tier will consider, and those criteria differ between lenders and change without notice. The grade a file lands in is still a lender decision, not a borrower choice, and the same file can be graded differently by two lenders. Our non-bank lender policy matrix records what lenders on our panel actually accepted, with the window and method stated. If a lender has already said no, start with what to do after a self-employed home loan decline, because the reason for that decline shapes everything that follows.
Every formal application creates a credit enquiry, and an enquiry stays on your credit report for five years whether or not the application succeeds. Applying to several lenders to see who says yes adds enquiries and does not identify the right lender. Where the listings are small, paid and older, a one doc home loan for self-employed borrowers can be the lighter path; where they are more serious, the assessment starts elsewhere.
One warning. No Australian credit provider can lawfully promise guaranteed approval or a home loan with no credit check on a regulated home loan, because responsible lending obligations require the lender to inquire into and verify your position. Treat those phrases as a warning sign.
What we see on files like this (general broker experience, September 2026)
In our experience, three things decide how a credit-impaired self-employed file goes, long before any lender policy is applied.
- The most common avoidable problem is that the borrower has not read their own credit report before applying, so the conversation starts with guesswork about what is listed and when.
- A credit event with a documented explanation and evidence of what has happened since is treated differently from the same event with no explanation. Evidence carries weight that commentary does not.
- Order matters. The reason for the first decline is what determines whether any other policy can help.
General broker experience, not a rate, a quote, an approval estimate or credit advice. Every lender reads a file differently and every application is assessed on its own facts.
Why do self-employed borrowers get told this is a low doc problem when it is a credit problem?
The two get collapsed because hard-to-prove self-employed income and a credit event both send a borrower to the same specialist and non-bank lenders, but they are separate problems. How you prove income is a documentation question: tax returns, BAS, business bank statements, an accountant's declaration. How your credit has been conducted is a conduct question: defaults, arrears, judgments, insolvency. A borrower can have either, both or neither.
Same destination, different reasons for arriving. Search results and AI answers for a bad credit home loan when self-employed mostly return low doc content for exactly that reason.
It matters practically. If the real issue is documentation, the fix is evidence. If the real issue is conduct, the fix is time, explanation and structure, and no amount of documentation substitutes for it. When we read a file like this, the first job is working out which problem it actually is, because a borrower who misdiagnoses it prepares the wrong file. For the documentation side, see which income documents a lender will accept and how non-bank lenders assess alternative income evidence. The same split applies to business borrowing, set out in the difference in a business lending context.
| Question | Documentation problem | Credit conduct problem |
|---|---|---|
| What it is about | How you prove self-employed income | How your credit has been conducted |
| Typical signs | Tax returns not current, a young ABN, recent trade stronger than the last lodged return, an accountant who can support figures the returns do not show, a clean credit file | A listed default, paid or unpaid; missed repayments in the last two years; a court judgment; a past bankruptcy or debt agreement; several recent enquiries |
| What fixes it | Evidence: tax returns, BAS, business bank statements or an accountant's declaration | Time, explanation and structure; documentation does not substitute for it |
| Who else to speak to | Your accountant | A free financial counsellor, and your trustee if you have been bankrupt |
Can you get a bad credit home loan when you are self-employed and do not have current tax returns?
Potentially, yes. Not having current tax returns and having adverse credit are two separate lending issues. A specialist lender may accept alternative income evidence such as BAS, business bank statements or an accountant-supported declaration, but it will still assess the default, arrears, judgment or insolvency separately. Low doc fixes an evidence problem. It does not fix a credit conduct problem.
If both issues exist, the useful question is not whether the loan is called low doc or bad credit. It is whether one lender has a policy that accepts the credit event, accepts the available income evidence, accepts the property and LVR, and still shows enough verified capacity to repay. Start with the evidence you actually have rather than choosing a product label first.
What counts as bad credit, and how long does each item stay on your file?
Bad credit on an Australian credit report means listings with a fixed life set by law: repayment history, including missed payments, shows for two years; defaults, court judgments and credit enquiries for five years; a serious credit infringement for seven years; hardship information for one year; and bankruptcy or a Part IX debt agreement for at least five years.
Start with your own credit report. The age of an item often matters as much as its size, and a borrower who knows the dates can time an application rather than guess. Moneysmart lists two credit reporting bodies in Australia, Equifax and Experian, and says they may hold different information about you, so get your report from both (moneysmart.gov.au, credit scores and credit reports, last updated 9 September 2026, read 30 September 2026).
| Item | What it is | How long it stays | What must happen before it is listed |
|---|---|---|---|
| Repayment history | Whether each payment was made on time | 2 years | A credit provider lists it. A payment counts as missed if it is made more than 14 days after the due date |
| Default | An overdue debt listed on your report | 5 years | Overdue at least 60 days; the amount is $150 or more; a notice sent to your last known address; a second notice at least 30 days later; the provider waits at least 14 days after the second notice, and cannot wait more than 3 months after it |
| Serious credit infringement, including a clearout | Where the provider believes the debt was evaded, or cannot contact you about it | 7 years | For a clearout, the provider has tried and failed to contact you about an overdue debt |
| Credit enquiry | A record that you applied for credit | 5 years | Listed whether or not the application succeeded |
| Court judgment | A court record of a debt decided against you | 5 years | A judgment entered against you |
| Financial hardship information | That you had a hardship arrangement | 1 year | A hardship arrangement agreed with the provider |
| Bankruptcy | A personal insolvency under the Bankruptcy Act 1966 | The later of 5 years from the day you became bankrupt, or 2 years from the day you were no longer bankrupt | You became bankrupt |
| Debt agreement (Part IX) | A formal agreement with creditors | The later of 5 years from the day the agreement was made, or 2 years from the day it was terminated, ended under s 185N of the Bankruptcy Act 1966, or declared void | You entered a debt agreement |
Sources: Office of the Australian Information Commissioner, What stays on a credit report?, published 10 March 2023, modified 9 October 2025, and Repayment history and defaults, last updated 2 October 2024; Moneysmart for the clearout; Privacy Act 1988 s 20W "Retention period for credit information (general)" on the Federal Register of Legislation. All read 30 September 2026. General information; the periods are set by law, not by the lender.
Paying it does not remove it. If you pay an overdue amount after a default is listed, the listing stays for its full period and the provider updates it to show the payment was made. Read what a default listing is and how repayment history information is recorded if either term is new.
Is the time a listing stays on your file the same as the time a creditor has to sue?
No. How long a listing stays on your credit report and how long a creditor has to start court action are two different clocks, and they are routinely confused. The credit report period is set by the Privacy Act and is five years for a default. The period in which a creditor can begin court proceedings on a debt is a limitation period set by state and territory law, and it runs separately. How it applies to a particular debt is a question for a free financial counsellor or a community legal centre.
How do you get your credit report for free, and what should you check first?
You can get a free copy of your consumer credit report once every three months from each credit reporting body, and also free if you have been refused credit in the past 90 days or your credit information has been corrected (oaic.gov.au, What is a credit report?, read 30 September 2026). Because the credit reporting bodies may hold different information, request a copy from each.
Does your credit score matter, or does the lender look at the actual defaults?
Both can matter, but they are not the same thing. Your credit report contains the actual enquiries, defaults, repayment history and other credit information; a credit score is a number derived from information held about you. Equifax and Experian each calculate their own score, both on a scale of 0 to 1,200, so the same person can hold two different numbers; Equifax says credit enquiries and repayment history carry the most weight in its score, and Experian says some credit providers may not look at the score at all (equifax.com.au, What is a credit score?, modified 14 April 2026; experian.com.au, Understanding my credit score; both read 30 September 2026). For an adverse-credit file, the underlying event, its date, whether it has been paid and the conduct since it happened are more useful to understand than chasing one universal score threshold.
What to check on each report:
- Every listing and its date, because the date decides when it ages off on the schedule in the table above.
- The amount and status of each default, including whether a paid default is shown as paid.
- Enquiries or debts you cannot explain. IDCARE notes that these can indicate either a mistake or identity theft (idcare.org, credit reports Australia, read 30 September 2026). If it is fraud, you can ask for a ban on your credit report. Under the Privacy (Credit Reporting) Code 2024, a ban can be extended with minimal evidence, a free alert tells you if anyone tries to apply for credit during the ban, and several fraud-caused errors can be corrected in one request (OAIC, new Credit Reporting Code, 1 October 2024, read 30 September 2026).
- Your personal details and past addresses, because the default notices described in the table are sent to your last known address.
- Any hardship arrangement, which is reported against your repayment history.
If something is wrong, fixing it is free; see how to fix a listing that is wrong. If everything is right, you now know exactly what a lender will see, which is the point of reading it first.
How do lenders treat a paid default against an unpaid one?
A paid default is generally read more favourably than an unpaid one, but paying it does not change how long the listing lasts: both stay on your report for five years. A paid default shows the debt was resolved; an unpaid default shows it was not. In our experience, whether it is paid is usually the first thing a lender looks at.
Where non-bank lenders publish their credit policy, they grade a default by whether it is paid, its size and its age, and the thresholds differ from one lender, and one tier, to the next. A figure quoted online as a universal cut-off is at best one lender's policy on one date. The pattern is set out category by category, with no lender named, in our policy matrix of what non-bank lenders on our panel accepted (lender credit policy guides read 30 September 2026). Beyond the listing itself, what a lender can assess is the explanation and what has happened since. For a closer look at how assessors approach it, see what lenders look for in defaults and late payments. On a business-purpose facility the same listings are read differently, covered in the same credit events on a business-purpose second mortgage.
Should you pay a default before applying for a home loan?
If the default is correct and you can pay it without creating a new financial problem, a paid default is generally easier for a lender to assess than an unpaid one. Paying it does not remove the listing or restart its five-year period. The provider updates the status to show it has been paid. If the listing is wrong, duplicated, caused by fraud or otherwise disputed, use the free correction process before treating payment as the fix.
What helps a lender read a default
- It is paid, and you can show when
- You can explain what caused it
- The cause has passed
- Repayments since have been on time
- The amount and the date are correct on your report
What makes it harder
- It is unpaid with no arrangement
- There are several
- The most recent is within the last year or two
- The listing is disputed but nothing has been done about it
- There is no explanation offered at all
What do missed payments and arrears do, and how long do they show?
A missed payment is recorded in your repayment history information, which stays on your credit report for two years, and a payment counts as missed when it is made more than 14 days after the due date. That is a different listing from a default, which runs five years.
- It is the part of the file that changes fastest, because each month of on-time payments is recorded as it happens. See repayment history information explained.
- Arrears on an existing home loan are a live matter, not a historical one, and the lender you are already with has its own hardship process (see the protections section below). For what happens when arrears keep running, see when arrears on a first mortgage trigger action.
What does a court judgment do to a home loan application?
A judgment tells a lender that someone went to court about a debt and won. It stays on a consumer credit report for five years, and paying it does not remove the listing: the status shows it has been satisfied, and it runs its five years.
In our experience, mainstream lenders generally treat an active or recent judgment as a stop, while specialist and non-bank lenders assess it case by case, looking at whether it is satisfied, how it arose and what has happened since.
You will see it said that judgments stay on a credit file for twelve years. On an Australian consumer credit report the period is five years, as the OAIC table above records. For how a judgment is weighed when the borrowing is for the business rather than the home, see how a judgment is read on a business-purpose facility.
What happens to a home loan during and after bankruptcy or a Part IX debt agreement?
During bankruptcy you can still apply for credit, but you must tell the credit provider you are bankrupt if you apply for credit over a set amount; after bankruptcy ends, there is no restriction on applying for a home loan. Bankruptcy normally lasts three years and one day.
The Australian Financial Security Authority says that if you apply for credit over a set amount while bankrupt, you need to disclose that you are bankrupt. The set amount is indexed, so check the current figure on afsa.gov.au rather than a number quoted elsewhere. After your bankruptcy has ended, AFSA says "there is no restriction on applying for credit or loans (including home loans)", and that it is up to the credit provider to decide whether to lend.
You will see it said that you must wait five to seven years after discharge. That is not a rule. You will also see it said that a specialist lender can consider you from the day after discharge; at least one published non-bank policy does, in its specialist tier, while its near prime tier asks for a longer gap and its prime tier does not accept it at all. That is one lender's policy, not a rule either. The rule is the one above: there is no restriction on applying, and the decision is the provider's. For the terms, see how bankruptcy works.
A trustee's interest in a house can outlast the bankruptcy. AFSA says trustees regularly recalculate equity in a property, and the trustee may sell the house even after your bankruptcy ends. The time limit is generally six years from discharge, though there may be variations depending on your circumstances. Anyone in this position should speak to their trustee before buying or refinancing.
A debt agreement is different from bankruptcy, and the two are constantly conflated. A Part IX debt agreement generally runs up to three years, or up to five years if you own your home.
| Question | Bankruptcy | Part IX debt agreement |
|---|---|---|
| Normal duration | 3 years and 1 day | Generally up to 3 years, or up to 5 years if you own your home |
| Applying for credit while it runs | You must disclose that you are bankrupt if you apply for credit over a set, indexed amount | The credit provider decides, and the agreement shows on your credit report |
| On your credit report | The later of 5 years from the day you became bankrupt, or 2 years from the day you were no longer bankrupt | The later of 5 years from the day the agreement was made, or 2 years from termination, ending under s 185N, or a court declaring it void |
| On the National Personal Insolvency Index | Your name continues to appear after it ends, showing that it has ended. The index records proceedings from August 1928 | Removed. If completed: the later of 5 years from the day it was made, or the date obligations are discharged. If terminated or declared void: the later of 5 years from the day it was made, or 2 years from that event |
| Applying for credit afterwards | No restriction on applying. The credit provider decides | The credit provider decides, and the credit report and index periods above still run |
| Your property | The trustee's interest can survive the end of the bankruptcy, generally for up to 6 years from discharge | A debt agreement covers unsecured debts. A mortgage is a secured debt, so the lender keeps its security and can take the property if repayments stop |
Sources: Australian Financial Security Authority, Life after bankruptcy, What is bankruptcy?, Income and employment, What happens after my agreement ends?, What debts does a debt agreement cover? and National Personal Insolvency Index (NPII) (afsa.gov.au); Office of the Australian Information Commissioner, What stays on a credit report? (oaic.gov.au, modified 9 October 2025); ASIC Moneysmart, Bankruptcy and debt agreements (moneysmart.gov.au, last updated 31 August 2026). All read 30 September 2026. General information, not legal advice.
Can you keep trading as a sole trader while you are bankrupt?
Yes. AFSA says bankruptcy does not stop you from working, and gives the example of a sole trader who keeps trading but must either tell people about the bankruptcy or change the business name to include their full name. AFSA also says bankruptcy can affect your ability to work as a licensed contractor in some trades and industries, such as construction. In New South Wales, for example, Building Commission NSW says a licence holder must notify it within 7 days of becoming bankrupt; a person who is currently bankrupt may be eligible for a contractor licence in any category except building or swimming pool building, with contracts limited to $20,000 including GST, and someone discharged in the last 3 years may have the same condition applied (nsw.gov.au, external administration and bankruptcy, last updated 21 July 2026, read 30 September 2026). Other states and territories set their own rules, so check with your licensing body. For a later home loan, the trading history you build in this period becomes part of the income evidence a lender reads.
Is the public insolvency index a separate record from your credit report?
Yes, and the difference between the two is counter-intuitive. The National Personal Insolvency Index is a publicly available record of personal insolvency proceedings under the Bankruptcy Act 1966, going back to August 1928. After a bankruptcy ends, your name continues to appear on it, showing that the bankruptcy has ended. A completed debt agreement, by contrast, is removed from the index on the schedule in the table above. A personal insolvency agreement, which is Part X rather than Part IX, puts your name on the index forever, recording that a controlling trustee authority under section 188 was signed. Which of these options suits a particular situation is a question for a registered trustee or a financial counsellor.
How much deposit do you need, and when does lenders mortgage insurance apply?
There is no single deposit rule for a bad credit home loan. The practical pattern is that lender choice usually narrows as LVR rises or the credit event becomes more recent or serious. An old paid default with clean conduct since can be assessed very differently from recent mortgage arrears or an unsatisfied judgment at the same LVR.
Where non-bank lenders publish tiered policy, the maximum loan to value ratio generally falls as the credit tier falls, and the figures differ between lenders, so a percentage quoted online as the rule for impaired credit is at best one lender's number. In our experience a larger deposit or more usable equity can widen the choice of lender when credit is impaired.
| Credit position | What the lender is likely to focus on |
|---|---|
| Old, paid default | Age, explanation, clean repayment conduct since and the rest of the application |
| Recent or unpaid default | Paid status, amount, cause, current conduct and the lender tier that will consider it |
| Current mortgage arrears | Whether arrears are continuing, any hardship arrangement and whether the proposed loan actually improves the position |
| Court judgment | Whether it is satisfied, how it arose, how recent it is and what has changed since |
| Discharged bankruptcy | Time since discharge, current conduct, income evidence and any continuing trustee interest in property |
Moneysmart says lenders mortgage insurance is usually payable when the amount borrowed exceeds 80% of the property's value, and that it protects the lender, not the borrower (moneysmart.gov.au, lenders mortgage insurance, last updated 16 September 2019, read 30 September 2026). The ratio itself is explained in loan to value ratio. A specialist lender may instead use a risk fee or lender protection fee under its own product terms, so compare the total establishment cost rather than assuming every high-LVR loan is priced the same way.
Are bad credit home loan interest rates higher?
Usually, yes. Specialist home loans for borrowers with adverse credit are generally priced above mainstream home loans because the lender is accepting a different risk profile. There is no single bad credit rate: pricing can change with the type, age and status of the credit event, LVR, income evidence, property, loan purpose and lender tier. Compare the interest rate, comparison rate, upfront fees, any risk or protection fee, and the likely cost of refinancing later rather than the advertised rate alone.
Do not compare a specialist home loan on rate alone. Compare the total cost of entering it, holding it and eventually refinancing out of it.
| Cost | What to check |
|---|---|
| Interest rate | The actual rate for your credit tier, LVR, property and income evidence |
| Comparison rate | A useful standard comparison measure, but it may not capture every scenario-specific fee or future refinance cost |
| Establishment or application fee | What is payable to set the loan up, and whether any part is refundable if settlement does not occur |
| Valuation fee | Whether the valuation is included, waived or payable separately |
| Legal or document fee | Whether lender legal or document preparation costs are charged separately |
| LMI | Whether lenders mortgage insurance applies at the proposed LVR and what it adds to the transaction |
| Risk or lender protection fee | Whether the specialist product uses a separate risk-based fee instead of, or alongside, standard mortgage insurance |
| Discharge and switching costs | What it costs to leave the current loan and enter the next one, including any fixed-rate break cost where relevant |
| Future refinance cost | New valuation, discharge, application, legal and other switching costs that may apply when you later refinance |
Can a lender say no even if it accepts your bad credit?
Yes. Accepting the credit event is only one test. The loan still has to fit serviceability, debt levels, property policy and the lender's other credit rules. APRA confirmed on 28 May 2026 that the mortgage serviceability buffer for APRA-regulated banks remains 3 percentage points. Since 1 February 2026, those banks must also keep new owner-occupier lending and new investor lending at debt-to-income ratios of six times or more to no more than 20% of each portfolio (APRA, macroprudential policy settings, published 28 May 2026, read 30 September 2026).
A six-times DTI is not an automatic borrower cut-off. It is a portfolio limit on APRA-regulated banks. APRA's settings apply to the banks it regulates; non-bank lenders set their own serviceability and debt policies. This is why a file can be acceptable on bad-credit policy but still fail on borrowing capacity.
For the lightest-documentation path and how far it lends against value, see the one doc home loan guide and its maximum LVR.
What happens after you apply for a bad credit home loan, and what should you ask before you sign?
After you apply, the lender records a credit enquiry, assesses your credit conduct and your income evidence together, values the property, and then either makes an offer or declines; if it declines partly because of your credit report, you are entitled to a written notice naming the credit reporting body it used.
- One application, one enquiry. Each formal application stays on your report for five years, so the lender should be chosen before you apply, not by applying. See how enquiries build up on a file.
- Both problems are assessed at once. The lender reads the credit report and the income evidence together, and a file that answers both up front is read once rather than in rounds. The document table below sets out what that means.
- The property is valued. The loan is assessed against the lender's valuation, not the price you agreed to pay.
- An offer, or a decline. If a credit report was part of the reason for a refusal, Privacy Act 1988 s 21P requires a written notice, and you can get a free copy of your report if you were refused credit in the past 90 days.
- Read the contract and the cost of leaving it, not only the rate, before you sign.
In our experience, a specialist home loan is priced above a mainstream one because the lender is taking on the credit history, and the realistic plan is to hold it while the file improves and then reassess. Nothing in that plan runs to a set date.
Will applying with a partner who has clean credit cancel out your bad credit?
No. A joint application can add income, deposit or equity, but it does not erase the other applicant's credit history. The lender assesses both borrowers and the combined liabilities. A clean-credit partner can strengthen the overall position, but the adverse listing still has to fit the lender's policy and still needs to be explained.
Can a guarantor or gifted deposit overcome bad credit?
Not by itself. A guarantor or gifted deposit can change the security or deposit position, but neither erases adverse credit. A gifted deposit may increase the cash contribution and reduce the required LVR if the lender accepts the source of the funds. A guarantor can provide additional security under a lender's guarantor policy. The lender still assesses the borrower's credit history, income, liabilities and ability to service the loan. If the problem is a default, arrears, judgment or recent bankruptcy, extra security does not make that event disappear.
Can the property itself stop a bad credit home loan?
Yes. A lender can accept the borrower and still decline or reduce the loan because of the security. The lender uses its own valuation, and specialist products can have tighter rules for some postcodes, property types, sizes, uses or saleability. If the valuation comes in below the purchase price, the effective LVR rises and the cash contribution can increase. Credit policy, income policy and property policy all have to work at the same time.
What should you ask before you sign a specialist home loan?
- What does it cost to set up? Ask for every establishment, application, valuation and legal fee in writing.
- What does it cost to leave? Exit fees on new home loans have been banned since 1 July 2011 (treasury.gov.au, read 30 September 2026), but Moneysmart lists a break fee on a fixed rate loan, a discharge fee, and application or switching fees as costs that still apply, and lenders mortgage insurance if your equity is under 20% (moneysmart.gov.au, switching home loans, last updated 29 July 2026, read 30 September 2026). Ask for each in writing, because the plan is usually to refinance later.
- Will the lender review the rate as the file improves? Or is refinancing the only way to move to a better rate?
- Which part of the file did the lender treat as the risk? The answer tells you what to fix before you next reassess.
- Is anyone promising guaranteed approval, or charging to remove accurate listings? Walk away, and read whether to pay a credit repair company.
What is the path back to a mainstream lender?
The path back to a mainstream lender is to correct anything wrong on your credit report, keep every repayment on time, let dated listings age off on their legal schedule, and refinance once the file has changed rather than on a set date. It runs in this order.
- Get your credit report from both credit reporting bodies and check every listing and every date.
- Correct anything that is wrong, using the free process in the protections section below.
- Keep repayments on time, because repayment history information carries a two-year window and it is the part of the file you can change fastest.
- Let the dated items age off on the schedule in the first table. This is the part that time does, not effort.
- Bring the income evidence up to date in parallel, because refinancing is a fresh assessment of both problems.
- Reassess when the file has changed, not on a calendar.
Before refinancing, Moneysmart suggests telling your current lender you plan to switch, because it may reduce your rate to keep you. A refinance is a new credit assessment, not an automatic upgrade, and it is compared after discharge, application, valuation and other switching costs, not on the headline rate alone. On the files we see, the timing question is usually answered by the credit report, not the calendar.
Useful reassessment triggers are changes in the file, not anniversaries: a default becomes paid, a recent arrears period moves further into the past, the last two years of repayment history become cleaner, a listing ages off, lodged financials catch up with current trading, debt is reduced, usable equity improves, or the business has a longer stable trading history. Any one change may or may not be enough, but these are the events worth reviewing.
What should you review at 6, 12, 18 and 24 months?
Use these as review points, not promised refinance dates. A refinance only makes sense when the file has materially changed, the new lender will accept it and the new loan is better after switching costs.
| Review point | What to check |
|---|---|
| Around 6 months | Are repayments clean? Has the cause of the credit event actually ended? Have debts or card limits reduced? Is the business position more stable than it was at settlement? |
| Around 12 months | Has any one-year hardship information aged off? Are newer BAS, accounts or tax records available? Has the business produced a stronger, more consistent trading record? |
| Around 18 months | Has the adverse event become materially older? Has usable equity improved? Has debt reduced enough to improve serviceability or DTI? |
| Around 24 months | What now appears in the two-year repayment-history window? Are current full-doc financials available? Has a mainstream or cheaper lender's policy become realistic for the whole file? |
These are checkpoints, not a countdown. Do not refinance simply because six, twelve, eighteen or twenty-four months have passed. Refinance when the credit conduct, income evidence, debt position, equity and lender policy line up, and only after comparing the total switching cost with the expected benefit.
See when a self-employed borrower may refinance, how long to wait before reapplying and a structured reset after a decline.
What do you need to prepare alongside your credit file?
Bring the credit report and the income evidence to the same conversation, because a lender assesses both and a file that answers both questions up front is read once rather than in rounds. For how the income half is assessed and for the product itself, see what a self-employed home loan is.
| What the lender is assessing | What to bring | Why |
|---|---|---|
| Credit conduct | Your current credit report from both credit reporting bodies | Every listing and date in the first table comes from here, and you should see it before an assessor does |
| The cause of a credit event | A short written explanation with dates, plus evidence that the cause has passed | Evidence can be assessed; commentary cannot |
| Income | Tax returns and financial statements, or BAS, business bank statements or an accountant's declaration | Which set applies is a documentation question, not a credit question |
| Existing commitments | Current statements for personal and business debts, and card limits | Available limits reduce assessed capacity, not just balances |
| Deposit or equity | The savings trail, or documentation for a gift, sale proceeds or equity | The source is assessed, not only the amount |
| Any current hardship arrangement | The arrangement and the payment record | Hardship information carries a one-year window, and an arrangement being maintained is evidence |
| A past bankruptcy | Your discharge date and your trustee's written position on any property | A trustee's interest in property can outlast the bankruptcy |
Sources: the credit reporting items are as cited under the first table (oaic.gov.au, read 30 September 2026); the bankruptcy row is as cited under the bankruptcy table (afsa.gov.au, read 30 September 2026). The document set reflects general lender practice and is not a lender requirement list. Where a business facility default is the listing in question, see when a business facility default lands on a home loan file.
What if the business has ATO debt, a business loan or another liability that is not shown as a personal default?
Tell the lender or broker anyway. A self-employed home loan assessment is not limited to the consumer credit report. Business debts, tax liabilities, personal guarantees and repayments can affect the income available to service the home loan even when they do not appear as a consumer default. Bring current statements, repayment arrangements and the business cash-flow evidence so the liability is dealt with in the assessment rather than discovered later.
If the liability is the reason the latest tax return understates or overstates the current position, keep that issue separate from the credit history. The lender needs to understand both what the business owes and what sustainable income remains after those commitments.
What protections apply, and how do you fix a listing that is wrong?
Because a home loan to live in or rent out is regulated consumer credit, five protections apply: responsible lending checks, a written notice if a credit report was behind a refusal, a default notice giving at least 30 days before enforcement, the right to ask for hardship, and a free complaints pathway through AFCA. A wrong listing can be corrected for free.
- Responsible lending. ASIC says a credit licensee must make reasonable inquiries about your financial situation and your requirements and objectives, take reasonable steps to verify your financial situation, assess whether the credit contract is "not unsuitable" for you, and give you a written copy of that assessment if you ask (asic.gov.au, responsible lending, last updated 6 August 2026, read 30 September 2026).
- A written notice if a credit report was behind the refusal. Under Privacy Act 1988 s 21P "Notification of a refusal of an application for consumer credit", if a lender refuses a consumer credit application wholly or partly because of information a credit reporting body supplied, it must give you a written notice within a reasonable period, naming that credit reporting body.
- A default notice before enforcement. Under National Credit Code s 88 "Requirements to be met before credit provider can enforce credit contract or mortgage against defaulting debtor or mortgagor", a lender must give a default notice allowing at least 30 days from the date of the notice to remedy the default before it begins enforcement proceedings (National Consumer Credit Protection Act 2009, Schedule 1, the Act on the Federal Register of Legislation, read 30 September 2026).
- Hardship. You can ask your existing lender for a hardship arrangement, and hardship information carries the shortest life of any listing on your report, one year. ASIC's follow-up review of lender hardship practices observed a 58% increase in the number of hardship notices relating to home loan accounts, compared with the 18-month period before its earlier reports (ASIC REP 815, published 25 September 2025, read 30 September 2026).
- A free complaints pathway. The first step is usually a complaint to the lender. If it is not resolved, the Australian Financial Complaints Authority is a free, independent service whose credit complaints cover home loans (afca.org.au, credit, finance and loan complaints, read 30 September 2026).
It also helps to know what a broker can and cannot do after a decline.
How do you fix a listing that is wrong, for free?
Ask the credit provider or the credit reporting body to correct it, in writing; it does not cost anything. Get your report from both credit reporting bodies first, because a listing may not appear on both. The Privacy (Credit Reporting) Code 2024 also recognises domestic abuse as a circumstance beyond your control that can support a correction. If the default notices described in the first table were never sent, the listing may be challengeable; that is a question for a free financial counsellor or a community legal centre. If the provider or reporting body does not respond within 30 days, or refuses to correct it and you disagree, the National Debt Helpline says the next step is a free external dispute resolution scheme such as AFCA (ndh.org.au, fix your credit report, read 30 September 2026). The OAIC also says a credit reporting body must destroy or de-identify credit reporting information once its retention period has ended and it is no longer needed for a correction request or dispute (oaic.gov.au, credit reporting information retention periods, last updated 5 September 2024, read 30 September 2026).
Should you pay a credit repair company to remove a default?
Not to remove a listing that is correct. Moneysmart notes that only incorrect information can be removed, and warns that some companies may try to charge you to have negative information removed. Correcting a wrong listing is free through the credit provider, the credit reporting body and then AFCA, and a free financial counsellor through the National Debt Helpline can help you make the request.
A credit event changes who will look at your file and what you have to evidence. It does not decide the outcome by itself. Every listing has a fixed legal life, but lenders also assess paid status, age, conduct since, income evidence, serviceability, LVR and the property. Self-employment is a separate evidence question, even when both problems exist together. A specialist loan should have an exit plan: know what has to change in the file before you reassess or refinance.
Key takeaway: read your own credit report before anyone else does. It is free.Frequently Asked Questions
In many cases yes, through specialist and non-bank lenders, and the answer depends on what is listed, how old it is and what you can evidence, not on a score alone.
There is no easiest product. The file that gets assessed most smoothly is the one where the credit report has been read, the events are explained with dates, and the income evidence matches a policy the lender actually has.
Treat them as two problems. Fix or evidence the documentation question separately from the credit conduct question, because a lender assesses both and they have different fixes.
Harder, not impossible. Whether it is paid, how old it is and whether you can explain it matter more than the fact of it, and it stays on your report for five years either way. See how lenders read defaults and late payments.
Often yes. A default ages off five years from the date it was listed, so a four-year-old listing is close to the end of its life, and a lender can see that date as clearly as you can.
Specialist and non-bank lenders are generally the ones that assess files with defaults, and some publish tiered credit policy guides for brokers setting out which defaults, by size, age and paid status, each tier will consider. Those criteria differ between lenders and change without notice, so the date of a guide matters as much as its figures.
There is no set waiting period. AFSA says there is no restriction on applying for a home loan once a bankruptcy ends and the decision is the credit provider's; some non-bank lenders publish tiered policy that considers a discharged bankruptcy in their specialist tiers, in at least one case from the day after discharge. The bankruptcy stays on your credit report for the later of five years from the day it began or two years from the day it ended.
The later of five years from the day the agreement was made, or two years from the day it was terminated, ended under s 185N of the Bankruptcy Act 1966, or declared void by a court.
No. Seven years is the period for a serious credit infringement only. Most defaults, enquiries and judgments run five years, repayment history two years and hardship information one year.
There is no single minimum credit score for an Australian home loan. Equifax and Experian each score from 0 to 1,200 using their own method, each lender sets its own criteria, and Experian notes some credit providers may not look at the score at all.
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