Bad Credit and Insurance in Australia: What You Need to Know (2026)

Quick Answer: In Australia, some insurers — particularly for home and contents insurance, car insurance, and income protection — do conduct credit checks as part of their risk assessment. A poor credit score or defaults on your credit file can result in higher premiums, policy exclusions, or outright declined applications. The impact varies significantly by insurer. Fixing your credit file by removing unlawfully listed defaults under the Privacy Act 1988 can improve your insurability and reduce premiums. A free assessment identifies whether any entries on your file are removable.

Most Australians know that bad credit affects loan approvals. Fewer realise it can also affect their insurance. Depending on the type of cover and the insurer, a damaged credit file can mean higher premiums, restrictive policy terms, or a declined application.

Here's what you need to know about how credit affects insurance in Australia — and what you can do about it.

Does Bad Credit Affect Insurance in Australia?

Yes — for certain types of insurance and certain insurers. The practice of using credit information in insurance underwriting is less prevalent in Australia than in the US, but it does occur here, particularly in:

The most common impact isn't outright rejection — it's premium loading. Insurers that view bad credit as a risk indicator charge more, particularly for monthly payment options versus annual upfront payment.

How Credit Information Is Used by Insurers

Under the Privacy Act 1988, insurers must disclose if they're conducting a credit check and what information they're accessing. They can only use credit information for specific purposes related to assessing risk.

What they can check:

• Credit score (through Equifax, Experian, or Illion)
• Default listings on your credit file
• Court judgements
• Bankruptcy status
• Number of recent credit applications (enquiries)

What they cannot do:

• Use credit information in ways not disclosed in their Product Disclosure Statement
• Discriminate on grounds beyond permitted risk factors
• Access your full repayment history without consent

The practical implication: a default or court judgement on your file may flag you as higher risk to some insurers, resulting in higher premiums or payment restrictions.

The Real Cost Impact

Premium loading for credit risk is typically 20–40% above the base rate. On combined home, car, and income protection, that's $1,000–$1,800 per year in extra premiums — every year, for as long as the defaults remain on your file.

Real Case Study: Natasha, Canberra — Lower Premiums After Default Removal

Natasha, 44, a senior public servant, discovered her home and contents insurer had increased her renewal premium by $440 compared to the prior year. When she investigated, she found a $490 Dodo internet default on her Equifax file — listed in 2023 after a disputed final bill.

She contacted Australian Credit Solutions. We reviewed the Dodo listing. The Section 21D notice had been sent to Natasha's previous rental address — she'd moved and updated her contact details with Dodo via their portal, but the notice was generated from the old CRM record. Sending to a known-outdated address is a clear breach of the Credit Reporting Code.

We lodged the formal dispute. Dodo removed the default in 26 days.

Result: Natasha's Equifax score moved from 554 to 699. At her next insurance renewal, two of her three policies were repriced at lower rates. Combined saving across her insurance portfolio: approximately $620 per year. She also qualified for a personal loan at 11.4% that she'd been quoted 24.9% for previously.

She only paid when we succeeded.

Get a free assessment from Australian Credit Solutions →

What to Do If You Have Bad Credit and Need Insurance Now

Short-term options while credit is being repaired:

• Pay annually rather than monthly — many insurers reserve monthly payment options for customers with acceptable credit scores
• Compare multiple insurers — not all conduct credit checks; some base pricing entirely on claims history and asset value
• Be transparent — undisclosed information can void a claim later; if asked, answer honestly
• Check your insurer's PDS — it will disclose whether credit information is used in underwriting

Medium-term: fix the file

A successful default removal improves your profile with any insurer that checks credit. The improvement is permanent — once removed, the default doesn't reappear.

Frequently Asked Questions

Do Australian insurers check your credit score? Some do, some don't — it varies by insurer and product type. Home and contents, comprehensive car, and income protection insurance are most likely to involve a credit check. Life insurance through superannuation typically does not. Check the PDS of any policy before applying to understand what information is accessed.

Can insurance be declined because of bad credit in Australia? Declined applications because of credit are less common than premium loading, but they do occur. More typically, insurers either charge a higher premium, restrict payment options (monthly vs annual), or add policy exclusions for customers with significant credit issues. Outright rejection is most common for commercial insurance.

Does fixing my credit score improve my insurance premiums? Yes — for insurers that use credit data in underwriting, a higher credit score results in lower risk classification and lower premiums. The improvement happens at the next renewal after your credit file is updated. Some insurers allow a mid-term repricing if your credit score improves significantly.

Can I get insurance without a credit check in Australia? Yes — many insurers do not conduct credit checks, or offer products that don't require one. Comparing insurers rather than accepting a single quote is particularly valuable for borrowers with credit issues, as pricing and underwriting criteria vary significantly across the market.

How do I find out if my insurance premium increased because of my credit? Contact your insurer and ask directly what factors contributed to your premium. Under the Privacy Act 1988, you can also request what credit information was accessed in relation to your application or renewal.

Is bad credit affecting my life insurance in Australia? For life insurance through superannuation (which covers most Australians automatically), credit is generally not a factor. For individually underwritten life insurance policies outside super, credit may be considered. Income protection insurance — which is individually underwritten — is more likely to involve a credit assessment than basic life cover.

Fix the Root Cause

The most effective insurance strategy is a clean credit file. If any of your defaults were listed unlawfully, removing them improves your position with every insurer, lender, and landlord that checks your credit.

Australian Credit Solutions — ASIC-licensed ACL 532003, No Win No Fee, 98% success rate, 4.9/5 from 976+ reviews, Award Winner 2022–2024.

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Australian Credit Solutions Pty Ltd holds Australian Credit Licence ACL 532003. Credit repair services are subject to individual assessment. Results may vary. This article provides general information only and does not constitute legal or financial advice.

Related reading: Bad credit fix Australia → | Default removal services → | Fix your credit score →