Fixing bad credit before you apply

A damaged credit file does not have to stop a business getting funding. But the way you prepare and present your application makes a real difference. These are the steps that help most, in roughly the order to do them.

1. Get your credit report

You can request your personal credit report free from credit reporting bodies; Moneysmart explains how. If your business has an ABN or ACN, it may also have a commercial file. You cannot fix what you cannot see.

2. Correct errors

Check every entry:

• Accounts that are not yours.
• Defaults that were paid but not marked as paid.
• Debts listed twice.
• Incorrect personal details.

Errors can be corrected by contacting the credit reporting body or the creditor. This costs nothing.

3. Settle or arrange small defaults

Small unpaid defaults, such as an old utility bill or phone account, are often cheap to settle and make a noticeable difference to how the file reads. Ask for the default to be marked as paid.

Short on time? Skip the reading and send a quick enquiry. No credit check, no lead auction, and a real person on the other end.

4. Bring tax up to date

Lodge outstanding BAS and returns, and set up an arrangement for any ATO debt. A business that is engaging with the ATO is viewed very differently from one that is not. See ATO debt options.

5. Clean up the bank statements

For unsecured lending, recent statements often matter more than old credit marks. In the months before applying:

• Avoid dishonours.
• Do not take on new short-term loans.
• Keep business activity in the business account.

6. Prepare short explanations

For each mark on your file, write one or two lines: what it was, when, why it happened and what has changed. Lenders read these all the time. A clear explanation turns a red flag into context. Our guide to explaining your loan request has examples.

7. Do not apply everywhere

Multiple applications in a short period can add enquiries to your file and make the next lender more cautious. An enquiry with us runs no credit check at all.

8. Consider security

If you own property, property-secured funding from $20k to $5m relies mainly on the property, with no valuation needed. It is often the most realistic route for owners with significant credit issues, and interest can be paid up front or capitalised while the business rebuilds.

Timeline at a glance

When	What to do
Today	Order credit reports
This week	Dispute errors, list defaults
This month	Settle small defaults, lodge outstanding returns
Next few months	Keep statements clean, avoid new short-term debt
When applying	Include explanations, consider security

Read more on bad credit business loans.

Where to go from here

• Bad credit business loans: Bad credit business loans for owners with defaults, late payments or past tax trouble. How lenders weigh a damaged file and what improves your chances.
• Business credit score basics: How business and personal credit files work for small business owners, what is recorded, how lenders use it and how to check and protect your credit.
• Property-secured business loans: Property-secured business loans from $20k to $5m against residential or commercial property, with no valuation needed and flexible repayment options.
• How to explain your loan request clearly: A clear loan request gets a faster, better answer. How to explain the amount, the purpose, the repayment plan and anything awkward in your history.
• Declined by the bank: what to do next: Business loan declined by your bank? Common reasons, how to find out why, and how non-bank lenders assess the same application differently.

A quick glossary

• BAS: the business activity statement used to report and pay GST, PAYG withholding and other amounts to the ATO.
• Capitalised interest: interest that rolls into the balance owing rather than leaving your account each month.
• Credit file: the record held by credit reporting bodies of credit applications, accounts and any defaults.

Before you accept an offer

• What is the full cost of this finance in dollars over the whole term?
• Can I repay early, and will that cost extra?
• Is there a fee on the unused part of the limit?
• Who needs to sign or guarantee the loan?
• What exactly triggers a default under the contract?

Where your accountant fits in

Before committing, run the plan past your accountant or bookkeeper. They can check that the amount matches the real need, that the repayments fit your cash flow forecast and that nothing in your tax position will cause a surprise. If property or guarantees are involved, everyone signing should understand what they are agreeing to, and some may want independent legal advice.

The short version

• Get your credit report and correct errors
• Settle small defaults and catch up lodgements
• Keep recent bank statements clean
• Explain each mark briefly and honestly

How we work through it with you

The process is built to avoid wasted time. The enquiry asks only what matters. The first call gathers what is missing. Statements are shared securely online, documents are signed electronically and any property security is prepared in parallel. Straightforward files can be approved within the hour, and funds can land within 24 hours once everything is signed. More complex files take a little longer, and you will be told why. Where a step is waiting on someone else, such as a co-owner’s signature, we will tell you so it can be chased.

A quick test before you borrow

Ask yourself where the repayment will come from. A customer payment, the next peak season, a property sale or steady trading are all real sources. Hope is not. If you can point to the money that will clear the loan, and roughly when, funding is likely to help. If you cannot, talk to your accountant about the underlying numbers first.

Getting your details together

You do not need a folder of financial statements to start an enquiry. For most unsecured and property-secured funding, these few items cover the essentials:

• Photo ID for each director or owner.
• Access to your business bank account for a secure statement link.
• Your latest BAS, if it is handy.
• Details of existing finance, including any daily or weekly repayments.
• For property-secured funding, the property address and current loan balance.

A quick word on the enquiry form

Every question on the form is there for a reason: it changes which funding fits. Describe the business as it stands today rather than the version you expect in six months. Mention any default, tax debt or recent decline in the notes. We look at those situations all the time, and knowing early lets us head straight for options that can actually work.

Talk to a real person

When you are ready, tell us what you need. Enquiring costs nothing and there is no credit check; a check only happens if you choose to go ahead with an offer. A real person reads every enquiry and calls you back, and we never auction your details to other lenders. One favour: fill in the form carefully. Honest figures for turnover, time trading and credit history let us match you properly the first time.