Are There Different Types of Bad Credit? And How Do They Affect Your Chances of Getting a Car Loan?
Understanding the Broker's Role
When it comes to applying for a car loan, not all bad credit is created equal.
In fact, one of the most common questions we get at Zoom Car Loans is: “Does my type of bad credit really matter?”
The answer? Yes, it does. But that doesn’t mean you’re out of options.
As brokers who work exclusively with clients who’ve had credit struggles, we see every situation under the sun.
The good news?
There are lenders out there who assess each case on its individual merit – and that’s where we come in.
Let’s Break Down the Types of Bad Credit
Bad credit can show up on your credit report in a few different ways. Each one tells a slightly different story to a lender.
1. Late or Missed Payments
This is one of the most common issues. Maybe you missed a couple of phone bills or fell behind on a personal loan. If it was a one-off or you’ve since caught up, many lenders will look past it – especially if it was a while ago.
2. Defaults
A default is recorded when a bill goes unpaid for more than 60 days and the creditor lodges it with a credit reporting agency. Lenders take these more seriously, but if the default has been paid (a “paid default”), you’re already in a stronger position.
3. Court Judgments
These appear when a lender or creditor has taken legal action to recover money owed. They do raise red flags, but depending on how long ago it was and whether it’s been resolved, some lenders are still open to offering finance.
4. Bankruptcy
This is a big one – and yes, it has a major impact. But even bankruptcy isn’t a dealbreaker for us. If you’ve been discharged from bankruptcy or are close to it, there are specialist lenders who may still consider your application.
5. Too Many Credit Applications
Every time you apply for credit, it leaves a mark. Too many applications in a short period can make lenders nervous. That’s why going through a broker like Zoom is smart – we assess your situation first and only apply to a lender likely to say “yes.”
So, How Does This All Affect Your Car Loan?
Each lender has its own set of rules and risk appetite.
Some will decline an application due to unpaid defaults. Others might be okay with defaults but won’t consider you if you’re still in bankruptcy.
This is where our team really shines – we know which lenders are the best fit for your unique circumstances.
What Can You Do?
Here’s what we recommend:
- Be honest about your credit history upfront.
- Keep your current finances in order – income stability counts.
- Let us do the heavy lifting. We’ll match you with the lender most likely to approve your application.
Different types of Bad Credit
At Zoom Car Loans, we don’t believe bad credit should mean no car.
We’ve helped thousands of Australians with all types of credit issues find a pathway to car finance – and we’re ready to help you too.
Different types of bad credit? Sure. But one thing stays the same – we’ll go the extra mile to get you back on the road.