Bad Credit – Credit Cards Guide

Information verified correct on December 7th, 2016

A poor credit history doesn’t have to put a stop to your financial goals. Compare your credit options here.

If you have a weak credit score and are looking for a credit card, you’ll struggle to find one in Australia. Currently, most Australian credit card providers require that you have a good credit rating to be eligible for approval.

In fact, a bad or low credit score affects more than just your ability to get a new credit card. It can also affect your ability to obtain a residential lease, utility account, or even a new job.

For these reasons, if you have a bad credit score, we’d advise that you tackle the problem at its root and work on improving your credit file before applying for another credit card. However, if you need to obtain credit urgently, this guide will help you understand your credit score and the different options available to you now.

Understanding your 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.

The following section illustrates how Veda scores and rates their clients.

833-1200: Excellent
  • You’re in the top 20% of Veda’s credit-active population.
  • 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
  • Action: 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
  • Action: 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 Veda’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 VedaScore

Alternatives for borrowers with bad credit

As bad credit rating 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.

Alternatives for borrowers with a bad credit rating

Sunshine Short Term Offer

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
  • Sunshine Loans do not conduct a credit check
  • Turnaround Time: 30 Minutes - conditions apply
  • Total Cost of Borrowing $100: 20% of borrowed amount + 4% of borrowed amount each month
  • Must be 18+
  • Confidential and secure!
  • No Credit Checks - Must be employed
    Rates last updated December 7th, 2016
    Max. Loan Amount Term of Loan Turnaround Time Total Cost of Borrowing $100
    Sunshine Short Term Loans
    Apply online with Sunshine Loans and you could borrow up to $2,000 paid directly into your account. Family Business since 1999.
    $2,000 9 weeks 30 Minutes - conditions apply 20% of loan amount + 4% of loan amount each month Go to site More
    Nimble Short Term Loan
    Apply for a short term loan and you could borrow up to $2,000
    $2,000 62-365 days 1 hour - conditions apply* 20% of borrowed amount + 4% of borrowed amount each month Go to site More
    Ferratum Cash Loans
    A small loan from Ferratum lets you borrow up to $1,900 without a credit check
    $1,900 Up to 6 mths Same Day if approved 20% of borrowed amount + 4% of borrowed amount each month Go to site More
    Cash Train Loans
    Apply for a Cash Train loan and get up to $2,000 sent straight to your bank account. Fast online application
    $2,000 10 weeks or 3 months 1 Business Day 20% of loan principal + 4% monthly charge Go to site More
    enably Short Term Loan
    A small loan up to $2,000 that can be repaid in three months.
    $2,000 Up to 3 months Within an hour 15 - 20% application fee and 4% monthly fee on loan amount Go to site More

    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 next 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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