What you need to know:
- It's very hard to get approved for a credit card when you have bad credit.
- You're better off fixing your credit problems before applying for a card.
- A short-term loan or bad credit personal loan might be a safer option.
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Being an applicant with bad credit means you're having trouble paying off your existing debts. This means you're likely to be rejected if you apply for a new credit card. You're a risky borrower from the card provider's point of view.
But here's where it gets worse. Getting rejected for a loan application is a negative mark on your credit score. This means that a borrower with bad credit who applies for a credit card without fixing their credit problems is only going to decrease their credit score.
Step 1: Pay off existing debt. If you've got a loan, outstanding bills or other credit-card debt, start making regular repayments. When a lender checks your credit report, seeing that you're making regular repayments towards your existing debt will be viewed positively.
Step 2: Start saving. We know it might be easier said than done, but having some savings in the bank shows lenders that you'll be able to repay your credit card in the future.
Step 3: Wait until you meet the eligibility criteria. Most credit cards list a minimum income requirement for approval. If you don't meet that threshold, you will automatically be rejected. Look for cards with a low minimum-income requirement or wait for the card you want.
Step 4: Get help if you need it. If you're struggling financially and would like to speak to someone for free financial advice, information and assistance, you can call the Financial Counsellors hotline on 1800 007 007 (open from 9:30am to 4pm, Monday to Friday).
It's always a good idea to check your credit score before applying for a loan or credit card. You might not even be aware that you have bad credit until you check.
You can check your credit score for free through Finder at the link below.
Get your free credit report and credit score
Once you've got your credit score, you can see if there are any issues and take steps to address them. You might even find there's a mistake in the report, such as a debt that doesn't belong to you.
You can get these errors fixed and improve your credit score. But you won't know about them until you check.
You can also check out our DIY credit repair guide for more help.
There are no specific credit cards for people with bad credit. That's part of why it's hard to get approved for a card as a borrower with bad credit.
A better option might be other forms of credit, like a short-term loan or a bad credit personal loan. These products are often designed for borrowers with bad credit.
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