A credit file is a record of the past. Business lenders care about it, but the good ones care more about whether the business can repay now — and what security backs the loan if something goes wrong. That’s why bad credit narrows your options without closing them.
What counts as “bad credit” to a lender?
In New Zealand, lenders pull reports from credit reporters — Centrix, Equifax and Experian are the three the government lists. There’s no single national score; each lender reads the report and applies its own rules. The things that matter most:
- Defaults — an overdue debt a creditor has listed, usually above a minimum amount.
- Judgments — a court order to pay.
- Repayment history — under comprehensive credit reporting, whether you’ve paid loans and cards on time over the last two years.
- Enquiries — how many times you’ve applied for credit recently.
- Insolvency — bankruptcy, a No Asset Procedure or a company liquidation you were involved in.
Defaults and judgments generally stay on your report for five years. A default marked “paid” reads very differently from one still outstanding.
Which business loans consider bad credit?
Property-secured business loans. Because the loan is secured by a first or second mortgage on New Zealand property — a home, rental, commercial building or land — bad credit, defaults and arrears are considered case by case. The lender’s main questions become the property’s value, the equity available and how the loan will be repaid. Amounts range from $20,000 to $1m, and no financials or tax returns are needed for the initial assessment.
Unsecured business loans and lines of credit. Some cash flow lenders consider weaker credit where the business’s recent bank statements are strong — steady deposits, few dishonours, room to service repayments. Expect them to look harder at the last six to twelve months of conduct, and to size the loan conservatively.
Bank lending. Banks are generally least flexible on credit history. If the bank has already declined you, our answer on who else lends when the bank says no explains the alternatives.
What helps your application?
Lenders are people. Context matters. Things that genuinely move the needle:
- A clear, short explanation. “Two defaults from 2023 when a builder we subcontracted to went into liquidation owing us $60,000. Both paid in 2024.” That’s a story a lender understands.
- Evidence it’s behind you. Paid default notices, a settlement letter, a year of clean bank statements.
- Honesty up front. Lenders will see the file anyway. Surprises halfway through an application do far more damage than issues disclosed on the first call.
- Security. Property security is the single biggest factor that turns a “no” into a “let’s talk”.
- A realistic amount. Asking for what you need — not the maximum — shows judgement.
Our guide on how to explain a bad year to a lender has a simple framework for this.
Should I check my own credit report first?
Yes. You’re entitled to access the personal information credit reporters hold about you, free of charge, under the Credit Reporting Privacy Code. It’s worth checking what’s actually listed — sometimes a debt you paid is still showing as unpaid, or there’s an entry that isn’t yours. Our guide to checking your own credit report in NZ explains how.
Can IRD arrears be included?
Yes. Tax arrears often go hand in hand with credit problems — cash was tight, something had to give. A property-secured loan can refinance or pay out IRD debt as part of the funding, which clears it with Inland Revenue and stops penalties growing.
Does bad credit change the cost?
Every loan is priced on the individual situation, and credit history is one input among several — alongside security, loan-to-value, trading and purpose. On the call, we’ll explain how your history is likely to affect the options, and look across our lending partners for the sharpest option available for your circumstances.
Does enquiring affect my credit?
No. Enquiring with the Hotline is free, takes about 60 seconds and doesn’t affect your credit score. A credit check only happens once you’re ready for a specific lender to assess an application — and you’ll know before it does.
Talk to someone who won’t judge
Ring the Hotline and tell a specialist what’s on the file. They’ve heard it before, and they’ll tell you straight which options are realistic. Or request a call back.