bad credit loan options

Credit options if you have a bad credit rating

Even if you have a bad credit rating, there may be credit cards and loans you can apply for.

Having a bad credit score can make it hard to get approved for financial products such as credit cards and loans. But it's important to remember there are still options available. Use this guide to find out what lenders define as "bad" credit, what credit options are available if you don't have a high credit score and how to find the best option for you.

What is "bad" credit?

There is no one definition of bad credit. In fact, just as your definition of "bad" may differ from another person's, one lender's definition will be different to another's. But in general terms, bad credit means that you have negative listings on your credit file. This could include defaults, bankruptcy, debt agreements, multiple recent credit enquiries and even missed or late payments.

If you're unsure of what's on your credit file, you can get your free credit score and then see what credit band you're in. You can also order a free copy of your credit file to get a better understanding of your credit position.

Get your credit score for free now

Credit cards and bad credit

ccf-bad-credit-woman-250x250Having a bad credit rating can make it hard to get a new credit card. This is because bad credit suggests that you might not be able to repay a credit card balance on time or in full, which also increases the risk of you falling into further debt. As banks and credit card providers in Australia have to follow responsible lending practices, this risk could mean they decline your credit card application when you have bad credit.

What about "bad credit cards"?

Sometimes you might hear people talk about credit cards that are designed specifically for people with bad credit. Known as "bad credit cards" or "no credit check credit cards", to many people these cards can sound like a solution when you have a poor credit score.

But there are currently no credit cards in Australia that you can apply for without having your credit checked – including cards that offer "instant approval". This means that if you have bad credit when you apply for a credit card in Australia, it will negatively impact on your chances of approval. Plus, if you do apply and you're declined, it could hurt your credit score even more. So instead of looking for a credit card when you have bad credit, you may want to focus on improving your credit score or looking at alternatives to credit cards.

Finance options to consider with a bad credit rating

Here are some of the credit and loan options that may be available when you have any negative listings on your credit file or your credit score falls in the lower credit score ranges and you find that you are not eligible for a traditional credit card or loan:

  • Short term loan. This is a loan of between $100 and $2,000 that you can apply for with bad credit. You'll pay an establishment fee of 20% of what you borrow as well as a monthly fee of 4% and loan terms generally range from 62 days to one year.
  • Medium amount loan. These are slightly larger loans available to people with adverse credit histories. Usually offered by lenders that also provide short term loans, they are available for up to $5,000 or $10,000 and come with a rate of up to 48% p.a. Loans of between $2,001 and $5,000 also come with a $400 establishment fee.
  • Centrelink cash advance. If you receive Centrelink payments you may be eligible for an advance. Eligibility depends on how long you've been receiving your payments and how much you receive. Keep in mind you can only receive a cash advance once per year.
  • No Interest Loan scheme (NILs). This scheme is provided by Good Shepherd Microfinance and allows those on low incomes or healthcare or pension card holders to apply for loans of between $300-$1,200. These loans must be used for essential goods and services and you need to show a willingness and capacity to repay.

Sunshine Short Term Offer

Sunshine Short Term Offer

  • Centrelink borrowers considered
  • Fast approval service
  • Borrow up to $2,000
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Sunshine Short Term Offer

A short term loan with a fast and easy application available to those with good or bad credit. You can apply today and get approved for up to $2,000.

  • Loan amount: $2,000
  • Loan term: 9-15 weeks
  • Turnaround time: 30 Minutes - conditions apply
  • Fees: 20% of borrowed amount + 4% of borrowed amount each month
  • Bad credit borrowers OK
  • Quick and easy Approval
  • No Credit Checks
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Short-term loan alternatives for applicants with bad credit

Rates last updated December 14th, 2017
Name Product Max. Loan Amount Term of Loan Turnaround Time Costs Fortnightly Repayment $1,500 Product Description
Sunshine Short Term Loans
$2,000
9-15 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.
Wallet Wizard Smart Loan (Up to 2K)
$2,000
Up to 2 years
24 hours
47.8% APR
$316.70
Apply for up to $2,000 as a convenient line of credit.
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
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

Quick guide to understanding your credit position

Whenever you apply for a credit card, use it for transactions or make a repayment on the account, it has an impact on your credit file. The same is true for other forms of credit, such as personal loans or mortgages.

This information can help lenders decide whether or not it will be a risk to approve you for new credit accounts or higher credit limits (along with other information such as your income and employment). This makes your credit file and credit score an important resource when figuring out what credit cards or loans you can apply for.

When you get your free credit rating, your details will place you into one of these credit grades:

Credit positionEquifax ScorePercentileLikeliness of an adverse event being recorded on your file in the next 12 months
Excellent833-12000-20%Highly unlikely
Very good726-83221-40%Unlikely
Good622-72541-60%Less likely
Average510-62161-80%Likely
Below average0-50981-100%Very highly likely

The bad credit checklist

Have you done any of the following? It may mean you have bad credit.

  • Missed a credit card or loan payment in the last two years. Your monthly payment information can appear on your credit file and will remain there for two years.
  • Defaulted on a credit card or loan in the last five years. Overdue accounts of $150 or more that are 60 days or more overdue remain on your file for five years and damage your credit score.
  • Declared bankruptcy in the last five years. A bankruptcy listing remains on your credit file for five years from the date you become bankrupt or two years from the date you are discharged, whichever is later.
  • Made multiple enquiries for credit cards or loans in the last six months. While credit enquiries remain on your file for five years, they are not necessarily a negative listing. Credit enquiries are really only a red flag to lenders and affect your credit score negatively if there are multiple enquiries in a short space of time and these are in the last few months.

What to do if you find an error

If you find an error on your credit file, it's important to report it and have it resolved as soon as possible. An error could be as simple as an overdue account that is now paid but is showing up as unpaid on your credit file. As these defaults can remain on your credit file for five years, reporting them as soon as you see them will ensure they're investigated sooner and will hopefully reduce the negative impact it could have on your file.

If you are unsure of how to deal with any errors or issues, you might want to seek the assistance of a credit repair service (such as Princeville Credit Advocates) to clean up your credit file. These services do come at a cost, but you're more likely to resolve the issues quickly and more thoroughly with the help of a professional.

See our guides for more tips on how to remove a default or enquiry from your credit file and how to lodge a dispute to your credit card issuer.

Princeville Credit Advocates

How to keep a good credit file or repair bad credit

Whether you want to protect your finances or already have a bad credit score, there are a few simple steps you can follow to repair your credit history:

  • Make your repayments on time. It may seem simple, but always pay your bills on time. If you think you might forget, set up a calendar reminder or auto-payments so that your bills are paid automatically from your debit card account. If you struggle to pay your bill each month, consider requesting that your statement due date is moved closer to your pay day date or get in touch with your issuer to discuss your options rather than having an overdue account.
  • Regularly review your statements and credit file. Each time you receive your credit statement, make sure to look over it carefully to ensure there aren't any fraudulent transactions or mistaken transactions listed on there. It's also important to regularly review your credit file to make sure it's in good standing. You should always check your credit file before you apply for another credit card or loan, but you should also be checking your credit history at least once a year to make sure it's on track.
  • Seek financial help. If you are having difficulties paying a bill or managing a debt, contact your issuer to discuss financial options (such as payment plans, reduced interest rates or extended due dates) to avoid defaulting on your payments and leaving a negative mark on your file.

Bad credit impacts many Australians. Unfortunately, a missed repayment or ongoing debt can be enough to impact your credit file for years to come. While most credit card issuers won't approve an applicant with bad credit, personal loan and short-term loan options are available in the mean time. Just make sure you compare your options and understand the costs involved before applying. As well as applying for alternatives, it's important to understand how bad credit works and what you can do to get your finances back in control.

Pictures: Shutterstock

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12 Responses

  1. Default Gravatar
    julieNovember 16, 2017

    Hi there my husband have been declared bankrupt. Any options to get personal loan thx

    • Staff
      HaroldNovember 17, 2017Staff

      Hi Julie,

      Thank you for your inquiry.

      Your husband may still able to get a loan if you are a discharged bankrupt or even if you are currently bankrupt. You will be more limited in terms of the lenders you have to choose from, and the fees and rates will also be considerably higher on bankrupt loans. You may also be required to attach an asset as security or apply with a guarantor. Find out about the loan options through this page.

      I hope this information has helped.

      Cheers,
      Harold

  2. Default Gravatar
    JackieJuly 6, 2016

    I have been late with paying credit cards and home loan. Ive never defaulted on payments but have been late. Im looking into selling my home, clearing my credit card debts and current mortage. This cannot be done until the house is sold and I have the funds to clear the debts. Will I be able to get another mortage straight away to buy another home or shall I have to rent and get my credit rating back on track?

    • Staff
      MayJuly 22, 2016Staff

      Hi Jackie,

      Thanks for your inquiry. You have come through to finder.com.au we are an Australian financial comparison website and general information service. We are not credit experts and so we can only provide a generalised advice.

      Sorry for the delayed reply. Your credit file contains all the details of credit related information about you which include payment defaults, credit applications (an enquiry will be recorded each time you apply) and a contract for a service like an internet or a mobile phone plan. Keeping your credit file healthy will give you the higher chances of approval when you apply for a mortgage, a personal loan or a credit card.

      So before you apply for another line of credit, it’s best that you get a copy of your credit report first and check your credit rating. If you see that your score is low, it may be a good idea to wait for a while and start improving your credit rating first.

      I hope this has helped.

      Cheers,
      May

  3. Default Gravatar
    SuzyMarch 27, 2016

    I have been in the country for a year, working for the 6 months required by most institutions, but do not have a credit score here so am being turned down for loans etc. The bank suggested a credit card to pay off and get a credit score. Is there anyone that is likely to give a credit card to someone with no credit history? would getting a payday loan and paying that off on time create a good credit score? any other suggestions on how to get started on the credit score?

  4. Default Gravatar
    zaravNovember 27, 2013

    PLEASE HELP. Can you advise me of a credit card I can apply for even though I have bad credit due to a phone account. I’ve applied for 15 and all said no. I have a great job now and need a credit card ASAP. Just assist me with accessing credit card for person with a default on their credit file.

    • Staff
      JacobNovember 27, 2013Staff

      Hi Zara.

      If you have a default on your credit file, you won’t have much chance of getting approved for a credit card as they are for people with good credit only. Furthermore, if you’ve applied for a number of credit cards in a short space of time, and you’ve been declined in all instances, then this will negatively impact your chances of getting approved into the future.

      You can read more about why credit card applications get declined on this page.

  5. Default Gravatar
    April 9, 2013

    I am a Discharged Bankrupt, I’m not quite sure what the date of discharge was, possibly 2-3 years ago.
    Is there any Creditor who would give me a Credit Card

    • Staff
      JacobApril 9, 2013Staff

      Hi Cynthia. Unfortunately their is no definitive answer to this question. You will have to speak to each lender in person to gage your prospects as an applicant. Some lenders may be willing to provide credit if you have a proven history of savings, while others may provide a personal loan to show that you can manage a credit product responsibly. A credit card may not be the best product to start with as one of the requirements is the applicant must have a good credit history. Jacob.

  6. Default Gravatar
    SungsooOctober 11, 2012

    Hi, I’ve fully paid all of my outstanding balance 1 month before and there are nothing left to pay.
    The credit record will be deleted from my file Jan.2013. In this case, can I get approved from Bank to get credit card? I tried few times but all been declined. I’m bit worry that lender or bank are able to see my previous footprint and it may effect to my future.
    Any ideas or solution to get approved for credit card please?
    Regards,
    Sungsoo

    • Staff
      JacobOctober 11, 2012Staff

      Hi Sungsoo. We spoke to a bank about what people with bad credit should do when looking to get access to credit, and this is what they said. Thanks for your question.

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