Quick answer
With defaults or court judgments on file, the routes that still work are those that rely on something other than the credit score: property-secured loans, guarantor support, invoice-backed or asset-based funding, and sometimes unsecured cash-flow loans for smaller amounts. Paying or settling the listings, adding a short factual explanation and building clean repayment history all improve the odds while you use a workaround.
Key points
- Defaults and court judgments stay on a consumer credit report for five years.
- Property security forgives listings more readily than any other route.
- Paid or settled listings look very different from open ones.
- Check your reports for errors first; corrections cost nothing.
A default or a judgment changes which lenders will look at you. It doesn’t change whether your business can be funded. The workaround is to lead with what the listing can’t touch: equity, a supporter, your customers, or your deposits.
Which routes work around listings?
| Route | How forgiving of listings | Best when | Read |
|---|---|---|---|
| Property-secured loan | Most forgiving | Equity is clear and the exit is credible | Property-backed loans |
| Second mortgage | Very forgiving | You’d rather keep your existing home loan | Second mortgages |
| Guarantor support | Forgiving | A supporter has a clean file and equity | Guarantor loans |
| Invoice-backed funding | Forgiving | You bill reliable business customers | Invoice-backed funding |
| Equipment leaseback | Forgiving | You own valuable equipment outright | Leaseback |
| Unsecured cash-flow loan | Case by case | Listings are old or paid and deposits are strong | Cash-flow loans |
Do paid and unpaid listings get treated differently?
Very differently. An unpaid default tells a lender there’s an open problem. A paid default tells them there was a problem and it’s been dealt with. An unpaid judgment is more serious still, because the creditor can enforce it.
| Listing status | How lenders tend to read it | Practical step |
|---|---|---|
| Unpaid default | Open risk | Pay it, settle it, or pay it at loan settlement |
| Paid default | Past event | Add a short explanation |
| Unpaid judgment | Enforceable debt | Usually must be paid at or before settlement |
| Paid judgment | Past event, taken seriously | Explain, show it’s resolved |
| Error or disputed | Shouldn’t be there | Seek a correction first |
If a creditor will accept less to close an account, see funding a creditor settlement.
Not sure how a lender will read your file? Tell us what’s listed, and a specialist will tell you honestly.
What should you do before applying?
- Get your reports from more than one bureau. Different bureaus can hold different information. The OAIC says you can access your report free every three months.
- Check every listing. Wrong amounts, wrong dates and debts that aren’t yours do happen. Corrections cost nothing.
- Pay or settle what you can. Get written confirmation and ask for the listing to be updated.
- Write a short explanation. Three to five factual sentences for each listing: what it was, why it happened, how it was resolved, what’s different now.
- Keep everything current from here. Every on-time payment adds to the clean history lenders weigh against the old listings.
Which moves make things worse?
- Paying for “credit repair” services that promise to remove accurate listings. Accurate listings generally stay for their full period.
- Applying with lots of lenders at once, adding enquiries on top of listings.
- Leaving a judgment unpaid while seeking new credit, if you could pay it.
- Omitting listings from an application. They’ll be found.
How do listings fade over time?
Listings don’t vanish early, but their weight drops as clean history builds around them. A default from four years ago surrounded by three years of perfect repayments reads very differently from one last month. Our page on rebuilding credit for the next round explains how to accelerate that.
How much detail should your explanation include?
Less than you think. Lenders want facts, not a story. A good explanation for a default reads like a short file note: the creditor, the amount, the date, why it went unpaid (a business failure, a dispute, a missed address change), when it was paid or settled, and one line on what’s different now. Attach proof of payment if you have it. Don’t speculate, don’t blame, and don’t leave anything out that the report will show anyway.
For judgments, add the court and the outcome, and confirm whether any enforcement action is still open. Lenders read hundreds of these; the ones that inspire confidence are calm, precise and complete. Our guide to a one-page lending proposal shows where the explanation fits alongside the request and the exit.
Business listings versus personal listings
Lenders check two kinds of file. Commercial credit reports cover the business: trade defaults, court actions against the company and payment behaviour with suppliers. Consumer credit reports cover each director personally: defaults on personal accounts, judgments and enquiries. A clean company file doesn’t cancel a director’s personal default, and the reverse is also true. Get both kinds of report for the business and every director before applying, so nothing on either file catches you off guard.
Does the size or age of a listing matter?
Yes. Lenders look at how much, how recent, and how many. A single small default from years ago, since paid, rarely changes much on a property-secured application. Several recent defaults, or a large unpaid judgment, need more explaining and often need to be cleared at settlement. If a listing is small and can be paid now, paying it before you apply is usually money well spent. If it’s large, structure the new loan so it’s paid out at settlement and the lender can see it closed on the same day.
A pattern matters too. One listing tied to a specific event, such as a failed customer or an illness, reads as a story with an ending. A string of listings across several years reads as a habit, and the lender will want stronger evidence that things have changed.
Ready to work around the listings?
Defaults and judgments narrow the field, but they rarely close it. Enquiring with us doesn’t involve a credit check, your details aren’t shared around a mass of lenders, and a real specialist reads your file and phones you with the route that fits. Please list every default or judgment you know of on the form, accurately; surprises later cost time, while honesty up front speeds everything up. See if you qualify.
Frequently asked questions
Can I get a business loan with an unpaid judgment?
It's harder, because the creditor can enforce it, but property-secured lenders sometimes lend on the condition that the judgment is paid at settlement. That turns an open judgment into a paid one on the same day.
How long do defaults stay on my credit report?
The OAIC says defaults and court judgments stay on a consumer credit report for five years. Repayment history information stays for two years.
Should I pay a default before applying?
Often, yes, if you can. A paid default is far less concerning to a lender than an unpaid one. If you can't pay it in full, a negotiated settlement funded by a loan may work.
What if the default is wrong?
Ask the credit reporting body or the creditor to correct it. You're entitled to a free report every three months, and to a free copy if you've been refused credit in the past 90 days.
Do lenders care about defaults on a director's personal file?
Yes. Business lenders check directors' personal files as well as the business's. A short explanation of personal listings is just as important as business ones.