Credit card options for applicants with bad credit
Want to apply for a credit card when you have a bad credit score? Here's what you need to know.
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It's difficult to get a credit card in Australia when you have bad credit. Credit card issuers use your credit score and the information on your credit report, as well as your income, employment situation and other factors, to determine your reliability as a borrower. If your credit profile indicates you have trouble repaying loans and credit cards, you may not be approved for a new credit card.
While a bad credit score can have a negative impact on your chances of getting a credit card in the short term, working to improve your credit rating can help increase your chances of getting approved for a credit card in the future.
This guide will take you through what you need to know.
Talk to your current bank
If you have a poor credit rating and think you'll have difficulty being approved for a new credit card, talking to your current bank is a good first step. As they already have a sense of your financial position and repayment ability, they may be more willing to issue you credit than a lender with whom you have no history.
What is my credit score?
Your credit score is a numerical representation of the information on your credit report and helps determine your success when it comes to applying for credit. Currently, there is not a standardised way of calculating credit scores, so the credit rating bodies use their own rating systems. Get your free credit report and credit scoreHere is a breakdown of credit scores and credit score grades from two credit reporting bodies, Equifax and Experian. Note that if you order your credit score and report from finder.com.au (which you can do by following the link above), your information will be delivered by Experian.
|Excellent||800 - 1,000||833 - 1,200|
|Very good||700 - 799||726 - 832|
|Good||625 - 699||622 - 725|
|Fair / Average||550 - 624||510 - 621|
|Weak / Below average||0 - 549||0 - 509|
What 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 options:
- Low limit credit cards. If your credit score is weak and you're working to improve it, consider a card with a low minimum credit limit. This reduces the risk to the lender and you may be more likely to get approved. Once you prove that you can make repayments and are doing so regularly, you can choose to apply to increase your limit in the future.
- 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.
- Short term loans. This is a loan of up to $2,000 that has to be repaid between 16 days and 1 year, but usually terms are around 62 days. Keep in mind these loans come with high fees (a 20% establishment fee and a 4% monthly fee) so really consider how much you need it before you apply.
- Bad credit personal loans. If you're in need of a larger amount than a short term loan, there are some bad credit personal loans available that can offer amounts up to $5,000 or even $10,000. 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
Sunshine Short Term Loans
- Loan Amount: $2,000
- Loan Term: 9-14 weeks
- Turnaround Time: 30 minutes - conditions apply
- Fees: 20% of loan amount + 4% of loan amount each month
- Bad credit borrowers OK
- Quick & easy Approval
Short term loan comparisons
Ultimately, a bad credit rating can have a big impact on your financial options, making it difficult to get a credit card, car loan, home loan or other forms of credit. But instead of looking for bad credit credit cards or no credit check options, you can improve your chances of approval by rebuilding your credit rating and managing money responsibly.Back to top
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