Owe IRD and have a credit problem? How lenders look at it

When cash gets tight, it rarely hits just one creditor. Owners who fall behind with IRD often have a supplier default, a late credit card payment, or a judgment from a dispute sitting on their file too. Many assume that combination means nobody will lend. That’s not necessarily so.

How do private lenders view bad credit alongside tax debt?

A credit file is a record of the past. A lender’s real question is about the future: can this business repay, and what protects the loan if it can’t? So alongside the credit report, we look at:

• What happened. A run of defaults during one bad year, now resolved, reads very differently from an ongoing pattern.
• What’s changed. New systems, a new customer base, a separate tax account, or an accountant now involved.
• Current trading. Recent bank statements tell us how the business is going today.
• Security. Equity in residential or commercial property can carry an application that a credit score alone wouldn’t.
• The exit. How the loan will be repaid or refinanced.

Bad credit and IRD debt are considered case by case. That isn’t a slogan. It means no automatic decline because of a number.

Can IRD debt now appear on a credit report?

For companies, yes, in defined circumstances. IRD has had the power to share information about unpaid company tax with approved credit reporting agencies for some years, and the rules changed on 1 April 2026. A company’s debt can now be reported when GST, PAYE or income tax debt is over $150,000 and 90 days overdue, or when debt has been unpaid for more than 12 months and equals 30% or more of assessable income (IRD).

IRD’s list of approved agencies, updated 8 September 2026, names Centrix, CreditWorks, Equifax and Experian (IRD). The rules apply to company debt, not to individuals or sole traders.

That matters for borrowing in two ways. Other lenders and suppliers may see the reported debt, and some will tighten terms. And clearing the debt before it reaches reporting thresholds avoids the problem altogether. Our credit reporting page and the Notice of Intent page explain the steps.

Worried about your credit file? Our enquiry doesn’t touch it. Start here and tell us honestly what’s on there.

What improves your chances?

Do this	Why it helps
List every default, judgment and arrears upfront	No surprises when the credit report comes back
Get your returns filed	The true IRD balance is known
Show current tax is being paid	Shows the debt won’t rebuild
Offer property security if you have it	Shifts the decision toward equity and exit
Have recent bank statements ready	Shows trading as it is now
Explain the cause in two or three sentences	Context turns a red flag into a story with an ending

What usually leads to a decline?

Honestly, it’s rarely the credit score alone. More often it’s:

• a business that is still losing money with no clear fix;
• new GST and PAYE going unpaid, so the debt is growing;
• undisclosed debts that surface late in the process;
• no realistic way to repay or refinance; or
• a property that’s offered as security without the agreement of everyone on the title.

If one of those applies, a loan may not be the answer, and we’ll tell you. An instalment arrangement or a conversation with your accountant might be a better first step.

An illustrative example

Illustrative only. Not a real client and not an offer.

A Manawatū landscaping company had two supplier defaults during a wet season and now owes IRD about $160,000 in GST and PAYE, past 90 days. The directors expect a Notice of Intent. The business is busy again, current tax is being paid, and one director has equity in a lifestyle block. A property-secured loan clears IRD before reporting happens, and the defaults are explained with supplier statements showing they’ve since been paid.

What about sole traders with bad credit?

A sole trader’s tax debt is personal. It isn’t credit-reported under the company rules, but personal defaults and judgments still show on a personal file. The same approach applies: be upfront, show current trading and explain what’s changed. Our sole trader page covers the extra options open to individuals.

How long do defaults and reported tax debt affect borrowing?

It depends on the type of entry and the credit agency’s rules, so ask the agency directly about your own file. In general, the older an issue is and the clearer the explanation, the less weight it carries. A lender looking at a file with a two-year-old default that was paid, followed by steady trading, sees a business that hit a problem and dealt with it.

What weighs most heavily is anything current: unpaid judgments, new arrears or tax that’s still growing. That’s why clearing the IRD balance can do more for your borrowing future than almost anything else. It removes a live problem from the file and from your conversations with suppliers and banks.

Is a private loan a stepping stone back to a bank?

Often, yes. Many businesses use a private loan for a set term, clear IRD, file on time and pay new tax promptly, and then refinance to a bank once their record looks clean again. We plan for that from the start, so the loan term and the exit line up with when your business should look bankable again.

Find out where you stand

If you owe IRD and your credit history isn’t spotless, send us a quick enquiry. We won’t run a credit check just because you asked. Your details aren’t pushed out to a crowd of lenders, and a real person reads every word. The more honest the form, the better the first call: tell us what’s on your file and what you owe, and we’ll tell you plainly whether we can help.