How Long Does Bad Credit Stay on Your Credit Report?

Your credit report plays a significant role in many financial decisions - from whether you're approved for a loan to the interest rate you're offered, and even your ability to access everyday financial products. If you've had financial difficulties in the past, it's natural to wonder:

"How long does bad credit stay on your credit report in Australia, and what can you do about it?"

The good news is that bad credit doesn't last forever. While negative listings can impact your financial options for several years, understanding how long different types of credit issues remain on your report can help you plan your next steps - whether that's rebuilding your credit or exploring options like a credit card for bad credit rating to get back on track.

What's Considered "Bad Credit" in Australia?

"Bad credit" isn't a formal label, but it generally refers to negative information recorded on your credit report. This information is collected by credit reporting agencies such as Equifax, Experian, and illion, and may include:

• Missed or late repayments
• Defaults on loans or credit cards
• Debt collections
• Court judgments (now less common)
• Bankruptcy or insolvency agreements
• Excessive credit applications in a short period

Each of these entries has a specific lifespan on your credit report, depending on the type and severity of the issue.

How Long Does Bad Credit Stay on Your Credit Report?

In Australia, the length of time negative information remains on your credit report is regulated by law. Below is a breakdown of the most common types of bad credit and how long they stay visible.

1. Late or Missed Payments - Up to 2 Years

Under Australia's Comprehensive Credit Reporting (CCR) system, lenders can report repayment history information, including whether you paid on time.

• Late or missed payments stay on your credit report for up to two years
• They are marked monthly, so consistent improvement over time matters
• Recent missed payments have more impact than older ones

This means that even small slip-ups can affect your credit score in the short term, but they also fade relatively quickly if you get back on track.

2. Defaults - 5 Years

A default is listed when you fail to pay a debt (typically $150 or more) that is overdue by at least 60 days and remains unpaid after formal notice.

• Defaults remain on your credit report for five years
• Paying the debt does not remove the default, but it may be marked as "paid"
• Paid defaults are generally viewed more favourably than unpaid ones

While defaults are serious, lenders often place more weight on what you've done since the default occurred.

3. Debt Collections - 5 Years

If an unpaid debt is passed to a collection agency, this can also appear on your credit report.

• Collection listings usually remain for five years
• In many cases, they replace the original default rather than adding a new listing
• Resolving the debt can improve how lenders assess your application

Debt collection listings can significantly impact your borrowing power, but they don't permanently define your creditworthiness.

3. Bankruptcy: 5 Years (or 2 Years After Discharge)

Bankruptcy is one of the most severe credit events, but even this has a defined lifespan.

• Bankruptcy stays on your credit report for five years from the date you became bankrupt
• Or two years after you are discharged, whichever is later

While bankruptcy can limit your options in the short term, many people successfully rebuild their credit once the listing expires.

4. Credit Enquiries - 5 Years

Every time you apply for credit, a record of that enquiry is made.

• Credit enquiries remain on your report for five years
• Multiple applications in a short timeframe can negatively affect your score
• Older enquiries have less impact than recent ones

Being selective and strategic with applications can help protect your credit profile.

Does Bad Credit Ever Truly "Disappear"?

Yes… once the relevant time period has passed, negative listings are automatically removed from your credit report. You don't need to apply or request their removal, provided the information is accurate. However, while listings may disappear, the habits that led to them can still affect your financial position if not addressed. That's why focusing on rebuilding credit is just as important as waiting for time to pass.

How Lenders View Old vs New Credit Issues

Lenders don't all assess credit reports the same way, but most consider:

• Recency: Recent negative events carry more weight than older ones
• Frequency: Multiple issues suggest ongoing financial stress
• Severity: A single missed payment is viewed differently to bankruptcy
• Improvement: Demonstrated positive behaviour matters

This means that even if bad credit is still listed, responsible financial behaviour can significantly improve your chances of approval.

How to Rebuild Your Credit While Bad Listings Remain

You don't need to wait for bad credit to fall off your report before taking action. Some effective strategies include:

• Pay All Bills on Time: Consistency is key - even small bills like phone plans or utilities contribute to your overall credit profile.
• Reduce Existing Debt: Lower balances and paid-off accounts signal improved financial stability.
• Limit Credit Applications: Avoid applying for multiple products in a short period, as this can raise red flags.
• Use Credit Carefully: Products designed for people with lower credit scores can help rebuild your profile when used responsibly.

Checking Your Credit Report Regularly

You're entitled to a free copy of your credit report every three months from each credit reporting agency in Australia. Regular checks allow you to:

• Ensure information is accurate
• Identify errors or outdated listings
• Track improvements in your credit profile

If you find incorrect information, you can dispute it directly with the credit reporting agency.

Bad credit can feel overwhelming, but it's important to remember that it's not permanent

In Australia, most negative listings stay on your credit report for between two and five years, after which they are removed automatically. More importantly, lenders look at the full picture - not just past mistakes, but how you manage your finances today. With time, consistency, and the right financial choices, it's entirely possible to rebuild your credit and regain access to better financial opportunities.