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Credit card options for applicants with bad credit

Want to apply for a credit card when you have a poor credit score? Here's what you need to know.

It's difficult to get approved for a credit card in Australia when you have bad credit history. This is because your credit file is checked every time you apply for a credit card – and most issuers require you to have a good credit history to get approved for a credit card.

While a bad credit score can have a negative impact on your chances of getting a credit card in the short-term, it's possible to improve your credit rating over time and increase your chances of credit card approval in the process. Use this guide to learn more about your credit score and how it affects credit card applications. We also compare credit options when you have bad credit and offer tips for getting your credit history back into shape.

What is my credit score?

Your credit score is derived based on factors in your credit history, and will determine your success when it comes to applying for credit. Currently, there is no one standardised way of calculating credit scores, so the credit rating bodies, banks and credit card companies use their own rating systems in assessing client credit scores.
Get Your Free Credit ScoreTo give you an idea of how credit rating works, here are details of how one of the major credit reporting bodies in Australia, Equifax, scores and rates their clients.

833-1200: Excellent
  • You’re in the top 20% of credit-active population of Equifax in Australia.
  • Highly unlikely an adverse event can harm your credit report in the next 12 months.

Action:

  • Great borrowing capacity and potentially eligible for greater rewards, lower rates and lower fees.
726-832: Very Good
  • Unlikely you will incur an adverse event in the next 12 months could harm your credit report.

Actions:

  • Refinance and consolidate more expensive debt.
  • Check your credit report regularly to monitor your score.
622-725: Good
  • Less likely an adverse event could harm your credit report within the next 12 months.

Actions:

  • Consolidate expensive debt into a low-interest loan with fixed repayments.
  • Check your credit report regularly to monitor your score.
510-624: Average
  • Likely that you will incur an adverse event such as a default, bankruptcy or court judgement in the next 12months.

Actions:

  • Pay your loans and bills on time. Use direct debits on payday. Work out payment plans with your credit providers.
  • Avoid making many applications in a short period of time.
  • Review your credit report for free as soon as you’re denied credit.
0-509: Below Average
  • In the bottom 20% of Equifax’s credit-active population. More likely that you will incur an adverse event such as a default, bankruptcy or court judgement in the next 12 months.

Actions:

  • Request and review your credit report.
  • Contact the credit provider or credit reporting body if there are any inaccuracies to correct them.
  • If you’re in hardship, seek out a financial advisor or work out a payment plan with credit providers.

Read more about your Equifax Score

What financial products can I get with bad credit?

While you may be looking for a credit card, it is difficult to get approved when you already have bad credit. As bad credit rating credit cards and no credit check credit cards aren’t available in Australia, you might need to consider some of the following option:

  • Debit cards. A good way to avoid debt is to steer away from credit and only spend what you have. Debit cards are debt-proof and widely accepted as payment. But note that using a debit card will have zero effect on your credit report and cannot help you rebuild your credit rating.
  • Prepaid credit cards. Prepaid cards are similar to debit cards in the sense that you’re spending only what you have. Unlike a debit or credit card though, you load funds on the card before using it. These cards also don’t affect your credit rating and don’t charge interest, so they can be a good way to build up your budgeting skills. Most prepaid cards are either Visa or Mastercard, so you should be able to use them in the same places you’d use your credit or debit card.
  • Bad credit payday loans. A cash or payday loan is a loan of up to $2,000 that has to be repaid between 16 and 365 days after it’s issued. Bad credit payday loans can be a quick answer to your short-term money woes and some lenders even skip the credit check as long as you’re employed. Repaying this loan on time can help with rebuilding your creditworthiness but there may be high interest rates and fees for choosing this option.
  • Bad credit personal loans. Personal loans are traditionally used when borrowing larger amounts of money and typically have a stricter approval process than payday loans. But there are some bad credit personal loans on the market that cater especially for people with poor credit ratings. These loans usually come with a flat interest rate and, if you repay responsibly, can be used to rebuild your creditworthiness.

Credit card alternatives for borrowers with a bad credit rating

Borrow up to $1,800 with no credit check

Sunshine Short Term Offer

  • Centrelink borrowers considered
  • Fast approval service
  • Borrow up to $2,000
Security Logo

100% confidential application

Borrow up to $1,800 with no credit check

Sunshine Loans offer a no credit check loan with a fast and easy online application to employed borrowers. Apply today to be considered.

  • Loan amount: $2,000
  • Loan term: 9 weeks
  • Turnaround time: 30 Minutes - conditions apply
  • Fees: 20% of borrowed amount + 4% of borrowed amount each month
  • Must be 18+
  • Confidential and secure!
  • No Credit Checks - Must be employed
Go to site

Short term loan comparisons

Rates last updated October 22nd, 2017
Name Product Max. Loan Amount Term of Loan Turnaround Time Costs Fortnightly Repayment $1,500 Product Description
Sunshine Short Term Loans
$2,000
9 weeks
30 Minutes - conditions apply
20% of loan amount + 4% of loan amount each month
$396
Apply online with Sunshine Loans and you could borrow up to $2,000 paid directly into your account. Family Business since 1999.
Nimble Short Term Loan
$2,000
62 days to 1 year
1 hour - conditions apply*
20% of loan amount + 4% of loan amount each month
$396
Apply for a short term loan and you could borrow up to $2,000
Cash Train Loans
$2,000
10 weeks or 3 months
1 Business Day
20% of principal amount (establishment fee) + 4% monthly charge
$396
Apply for a Cash Train loan and get up to $2,000 sent straight to your bank account. Fast online application
Ferratum Cash Loans
$1,900
up to 6 months
Same Day if approved
20% of borrowed amount + 4% of borrowed amount each month
$396
A small loan from Ferratum lets you borrow up to $1,900 without a credit check

Compare up to 4 providers

Ultimately, a bad credit rating can significantly impact your lifestyle, making it difficult to getting a car, a home loan or other forms of credit. If you find yourself in such a position, don’t despair. Making the right choices from now on can lead to financial freedom down the road.

Work on improving your credit rating and managing your finances so that you can live free of debt. You may begin by requesting a free copy of your credit report and identifying the negative listings on your file. See our DIY credit repair guide for more help.

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Sally McMullen

Sally McMullen is a journalist at finder.com.au who is a credit cards, frequent flyer and travel money expert by day and music maven by night.

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