Explaining past credit problems to a business lender on the phone

The call people put off longest

If there’s a default, a string of late payments or a messy period on your credit file, the idea of explaining it to a stranger on the phone can be enough to stop you calling at all. That’s understandable, and it’s also the most expensive way to handle it. Applying online without explanation, getting declined, and applying again elsewhere adds credit enquiries to your file and time to your problem.

A short, honest explanation on the phone does the opposite. It costs nothing, because there’s no credit check when you first enquire, and it lets the specialist look only at lenders who consider credit history case by case.

The four points to cover

1. What it was. A default, late payments, a court judgment, a debt agreement, a previous business that closed.
2. When. Roughly the month and year.
3. Why. One sentence. Illness, a customer who didn’t pay, a partnership that broke down, a slow year.
4. Where it stands now. Paid, on an arrangement, disputed, or still open.

That’s it. You don’t need to relive the whole story.

Scripts you can adapt

A single old default:

“I should mention there’s a default from early 2023, about $1,800 on a phone account. It happened when I was changing providers and the final bill went to an old address. It’s been paid since.”

Illustrative example only.

A rough patch with several late payments:

“Our credit history isn’t perfect. We had several months of late payments in 2024 when a big customer went under owing us money. We’re back on track now and everything’s been current for the last twelve months.”

Illustrative example only.

A more serious history:

“I had a previous business that closed in 2022 and there are still marks on my file from that. The current business is separate, has traded for two years, and I own a home with decent equity.”

Illustrative example only.

Each version gives the specialist enough to judge which lenders are realistic.

How credit history is viewed

Every lender has its own approach, but some patterns hold:

Factor	Why it matters
How long ago	Older problems generally weigh less than recent ones
Whether it’s paid	A paid default reads very differently to an open one
Size and type	A small utility default isn’t the same as an unpaid business loan
The explanation	A one-off event with a clear cause is easier to assess
Current trading	Strong recent bank statements speak loudly
Property security	Can make lenders more comfortable with past issues

According to the OAIC, defaults stay on a consumer credit report for five years, repayment history information for two years, and credit enquiries for five years. So a problem from several years ago may be close to dropping off entirely.

Check your own file first

If you’re not sure what’s on your report, check before you call. You’re entitled to a free copy from each credit reporting body every three months, and also if you’ve been refused credit in the past 90 days. Equifax and Experian are the main bodies, and they may hold different information, so it’s worth checking both. If something is wrong, you can ask for it to be corrected.

Knowing exactly what’s there means you can describe it accurately, and nothing in the lender’s check comes as a surprise.

What not to say

• Don’t say “nothing” if there’s something. It will show up, and credibility is hard to rebuild.
• Don’t blame everyone else at length. A sentence of context is enough.
• Don’t guess dates wildly. “Sometime in 2023” is fine; “years ago” when it was last spring isn’t.

Where property and timing fit

If you own property, say so. Secured lenders often weigh the property and the exit more heavily than the credit history. Our page on describing property as security shows how. If a bank has recently declined you, see what to say when another lender said no, and consider asking the bank for its reason first.

If the credit problems are tied to existing debts that are still under pressure, list those too using our page on existing business debts.

Business credit and personal credit: both can come up

Small business lending often looks at two kinds of credit history. There’s the business itself, particularly if it’s a company, and there are the directors or owners personally, because many business loans involve a personal guarantee. A problem on either can come up.

When you describe a credit issue, say whose it is:

“The default is on my personal file, not the company’s. It’s from a car loan in 2022 that was settled when I sold the car.”

Illustrative example only.

Or:

“The company had a payment default with a supplier last year during a dispute. It was resolved and paid in full.”

Illustrative example only.

It also helps to mention anything else that sits alongside credit history, such as an ATO debt or an arrangement with a creditor, because lenders tend to look at them together. Our page on owing the ATO covers that side.

Finally, remember that one conversation now is better than several applications later. Every formal application can be recorded as an enquiry, and recent enquiries are part of what lenders see. Talking it through first, when there’s no credit check at all, means any application you do make can go to a lender that genuinely considers your history. The first-minute script shows where the credit sentence fits in the call.

Ready to explain it once?

Ring 03 4059 1829 and say it in the first minute, or put it in your 60-second enquiry and we’ll call you. There’s no credit check when you first enquire, your details aren’t circulated to a pack of lenders, and the person you speak to has heard it all before. Please be accurate about what happened and when. That honesty is what lets us find a lender who’ll actually look at it.