Many borrowers can get a personal loan with a bad credit score, but the interest rate will be higher.
Payday loans are easier to get than personal loans if you have bad credit, but these loans are more expensive and have very high rates.
You can improve your chances of getting a personal loan (and get a better rate) by improving your credit score.
⚠️ Warning about Borrowing
Do you really need a loan today?*
It can be expensive to borrow small amounts of money and borrowing may not solve your money problems.
Check your options before you borrow:
For information about other options for managing bills and debts, ring 1800 007 007 from anywhere in Australia to talk to a free and independent financial counsellor
Talk to your electricity, gas, phone or water provider to see if you can work out a payment plan
If you are on government benefits, ask if you can receive an advance from Centrelink: Phone: 13 17 94
The Government's MoneySmart website shows you how small amount loans work and suggests other options that may help you.
* This statement is an Australian Government requirement under the National Consumer Credit Protection Act 2009.
Compare loans for bad credit borrowers
Borrowers with bad credit scores can still qualify for a range of personal loans and other products.
The type of loan you can get, and the rate you'll receive, depends on the following:
How much you want to borrow.
How strong your credit score is (there's good, bad and then there's verybad).
Your income.
This leaves most bad credit borrowers with 2 options: a risk-based personal loan with a higher interest rate or a payday loan with an even higher rate.
Risk-based personal loans
Lenders will base your interest rate on how risky a borrower they think you are. They will look at your credit score, your bill and credit paying history and your regular income
You can borrow more with a longer term with a personal loan.
This is your best option if you want to borrow a larger amount (above $2,000), but borrowers with very bad credit might struggle to get approved.
Approval typically takes between 1 hour and 2 days.
Payday loans
Payday lenders' eligibility criteria are more flexible, making these loans easier to get for borrowers with bad credit.
Payday loans are a short-term solution at best and get very expensive. These loans don't have interest rates but charge hefty fees (up to 20% of the loan amount upfront plus a 4% monthly fee).
The maximum amount you can borrow is $2,000.
Payday loans offer quick cash for borrowers in difficult circumstances, but this often gets you into more financial trouble.
Instead of a payday loan, you may be able to get a safer alternative, like a no-interest loan. More on that below.
By law, payday lenders cannot offer loans under $2,000 that must be repaid in 15 days or less.
There are also fee and rate caps for similar short term loans: While every lender is different, by law the following is the maximum you can be charged:
Type of loan
Fees and charges
Loans under $2000, with terms between 16 days and 12 months
Establishment fee. 20% of the loan amount
Monthly fee. 4% of the loan amount
Loans between $2,001 and $5,000 with terms between 16 days to 2 years
Establishment fee. $400
Maximum interest rate. 48% p.a., including all other fees and charges.
Loans between $2,001 and $5,000 with terms over 2 years
All fees and charges cannot exceed 48% p.a.
This category includes any loans above $5,000 and loans below $5,000 that have a loan term of over 2 years. source
How your credit score affects your personal loan options
When applying for any kind of loan, lenders want borrowers who have demonstrated a long, stable history of repaying debts and staying in full-time employment.
Lenders don't want to see the opposite: missed bills, defaults on loan payments, outstanding credit card debts or a patchy employment history.
Lenders can get a good sense of your personal financial history and behaviour through your credit score. And you can too. Checking your credit score through Finder is free and takes just a few minutes.
Different credit rating agencies have slightly different scoring methods based around 5 bands or categories. If you checked your score through Finder, these are the bands you'll see.
A higher credit score is better. It makes it easier to qualify for a home loan and unlocks lower interest rates on personal loans.
Very good or excellent credit score = lower rates, and lower rates = cheaper loan repayments.
You develop a good credit score over time by demonstrating a history of positive credit behaviour. This includes doing the following:
Paying bills on time.
Making regular repayments on debts (like a credit card).
Keeping the limit on your credit card low (and don't have too many credit cards).
You can end up with a bad credit score if you do the following:
Miss bill payments.
Default on a payment.
Have multiple outstanding debts.
Apply for multiple credit cards or loans in a short time.
Have unpaid buy now, pay later debt.
Some actions are worse for your credit than others
Missing a payment here and there and quickly making it up usually won't hurt your credit score.
According to the Office of the Australian Information Commissioner, "You are considered to have missed a payment if you make the payment more than 14 days after the due date." Then it goes on your credit report for 2 years.
According to credit agency Equifax, "Even a $5 account paid late" can end up on your credit score.
But a missed payment's impact on your credit is minimal compared to a default. A default is recorded if you miss a payment worth $150 or more for at least 60 days.
What else do lenders look at when assessing bad credit loan applications?
Lenders look at much more than your credit history when you apply for a personal loan. You could have a perfect credit score and still get rejected for a $10,000 personal loan if your income is too low and you don't have security.
And if you do have bad credit, meeting a lender's other criteria will help your application.
Lenders examine the following:
Your income. Most lenders have a minimum income requirement before they'll lend to you.
Your age. You'll need to be over 18.
The amount you're trying to borrow. Larger loan amounts are naturally higher risk.
The length of the loan. Your loan term affects your monthly repayments.
Whether you have security or not. If you have an asset to back the loan (such as a car), you may be able to get a lower interest rate.
How can I increase my chances of getting a personal loan with bad credit?
Having bad credit makes it harder to get a loan approved. But there are several ways to boost your chances.
Apply for a smaller loan. It's easier to get approved for a smaller loan.
Apply with a guarantor. A loan guarantor is someone, often a family member, with good credit and a stable income who can support your application. If you can't repay your debt, the guarantor may have to.
Offer something as security. If you have a property or asset to back your application, you can get a secured personal loan. You'll boost your chance of approval and get a better rate.
Check all eligibility requirements before applying. Read the lender's website carefully before applying to make sure you're actually eligible for the loan. Send the lender an email or call to check if you're not sure it's suitable.
Improve your credit score before you apply. Taking simple steps to boost your credit score before applying will put you in a better position.
5 tips to improve your credit score
No matter how bad your credit score is, there's always something you can do to fix it.
Pay any overdue bills first. Prioritise unpaid bills that are at risk of being listed as missed payments or defaults.
Lower your credit card limit. If you have a credit card, dropping the card's limit will lift your credit score.
Demonstrate a history of paying off debts. This means making regular repayments on any loans or card debt.
Limit the number of debts you have. If you have multiple credit cards, consider combining them into one using a balance transfer credit card. If you can stick to one card and pay it off consistently, this will look much better on your credit report.
Fix any errors on your credit report. Sometimes there are mistakes on your credit report. If you think there's an inaccurate default or other red mark on your report, you can apply to get it fixed.
Alternatives to bad credit personal loans
If you need cash quickly and have bad credit, you have other options. Some of these alternatives may work out cheaper than a personal loan.
Pay-on-demand apps
Pay-on-demand apps let you borrow some of your next pay cheque in exchange for a fee.
Fees are usually a percentage of the money you've borrowed (e.g. 5%) or a flat fee. Calculate the fee before applying.
While less risky than some loans, keep in mind that using pay-on-demand apps means your next pay cycle will be smaller because of the loan and the fees involved.z
Peer-to-peer loans
Peer-to-peer lenders are online platforms that connect individual investors to borrowers. It's quick and you get a personalised, risk-based rate.
You may be able to get a lower rate than with a traditional loan and have an easier time getting approved.
You may not be able to borrow as much with this kind of finance.
Make sure you check what kind of upfront and monthly fees you have to pay.
No Interest Loan Scheme (NILS).
NILS are interest-free loans offered by community organisations to help Australians on low incomes. You can borrow up to $2,000 to cover various essential needs.
These loans don't have fees or interest charges but are not cash loans. You usually receive a cheque to use at a specific store, and there are limits on what you can use a loan for.
You'll need a Health Care Card, Pensioner Concession Card or an annual income under $45,000 after tax to qualify and meet other requirements.
If you receive any benefits via Centrelink, you can apply for an advance on a payment. This means your next payment will be smaller.
Buy now pay later
If you need a loan to purchase specific items, the seller might offer buy now pay later options. This allows you to buy an item and pay it off in instalments.
You don't pay interest on buy now pay later purchases as long as you can make the repayments. Be sure to factor in late payment fees and account fees the provider may charge.
Buy now pay later is a form of credit. Regularly using buy now pay later and missing payments could harm your credit score.
Frequently asked questions about getting a personal loan with bad credit
Only credit providers and other authorised bodies can access your credit report. Your report contains the following:
Personal information (your name, date of birth and driver's licence number). Your credit rating. A list of all credit products (credit cards, loans) you have held in the last 2 years. Repayment history and how often you missed payments in the last 2 years. Applications you've made for credit products and the total amount you've borrowed. Any defaults on utility bills or credit products. Any bankruptcy or debt agreements in your name.
You can get a personal loan or similar product if part of your income comes from Centrelink payments. But it is more difficult and may limit your options.
A lender may require a portion of your monthly income to come from a job rather than Centrelink payments.
Be wary of lenders offering "guaranteed" approval. These loans could be scams or have very high interest rates.
Some payday lenders do say "guaranteed payday loan" on their website. But if you look at the fine print, they often specify that you need to meet the lending requirements.
Before you apply, you should always check if the lender is legitimate. You can do this by checking if they are registered with ASIC or if they appear on ASIC's list of companies you should not deal with.
There's no definitive list of lenders that accept bad credit scores. Lenders don't publish detailed information about how they assess the creditworthiness of borrowers.
Your best bet is to look at lenders' websites and see if they mention lending to borrowers with bad credit. You can often submit an enquiry to a lender first before submitting a full application. Or you can contact a lender yourself and ask if they lend to borrowers with your credit score.
Here is a list of lenders that may be able to help:
Many lenders offer same-day loan approval. If you need money fast, you can do the following:
Look at lenders that offer fast loan approvals. Borrow a smaller amount of money. Try a peer-to-peer lender or a pay-on-demand app (for a smaller loan amount).
Even if your need for cash is urgent, always check the lender and loan terms carefully before applying.
Be aware that many payday and "quick" loans come with quite high interest rates and fees.
Don't let a sudden shortfall turn into a long, punishing debt.
Richard Whitten is a money editor at Finder, and has been covering home loans, property and personal finance for 6+ years. He has written for Yahoo Finance, Money Magazine and Homely; and has appeared on various radio shows nationwide. He holds a Certificate IV in mortgage broking and finance (RG 206), a Tier 1 Generic Knowledge certification and a Tier 2 General Advice Deposit Products (RG 146) certification.
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Deciding which short-term loan is right for you can be tricky. We compare Nimble and Cash Converters to see which fees and features will suit you best.
We are on the correct page for you to make a comparison on a table of providers in taking out a loan. Kindly review and compare your options on the table displaying the available providers. Once you have chosen a particular provider, you may then click on the “Go to site” button and you will be redirected to the provider’s website where you can proceed with the application or get in touch with their representatives for further inquiries you may have.
Before applying, please ensure that you meet all the eligibility criteria and read through the details of the needed requirements as well as the relevant Product Disclosure Statements/Terms and Conditions when comparing your options before making a decision on whether it is right for you. Hope this helps!
Though I can’t recommend one specific lender to you as we are a comparison website, you may be able to compare some lenders that offer car loans with bad credit. Please review the criteria and get in touch with the lender directly for the possible options available to you. When you are ready, you may then click on the “Go to site” button and you will be redirected to the lender’s website where you can proceed with the application or get in touch with their representatives for further inquiries you may have.
I have 2 defaults on my name from a stuiped furniture company, I gave back there furniture in excellent condition, and the defaulted me 2 times of $1400 I’m still paying them off, and I have a variable impact from Telstra on my name.
I’ve been approved for a $600 loan and almost done paying it off, I am I need of a $2000 loan where can I get one? Also I’m working and on single parenting
You can check our list of payday loans for single parents. On the page, is a comparison table you can use to see which lender suits you. You can click the name of the lender or the “More info” link to be redirected to our review page and learn more about the lender’s loan offer, rates, and requirements as well as the pros and cons of using their loan service. When you are ready, you may then click on the “Go to site” button and you will be redirected to the lender’s website where you can proceed with the application or get in touch with their representatives for further inquiries you may have.
Before applying, please ensure that you meet all the eligibility criteria and read through the details of the needed requirements as well as the relevant Product Disclosure Statements/Terms and Conditions when comparing your options before making a decision on whether it is right for you. You can also contact the provider if you have specific questions.
Hi i currntly have car on fianance that i have been paying for the past year and have not missed or made a late payment a d now i a inneed of a $5000 loan for repairs but my credit rating is not so good i have bee employed for over 6 years fulltime is there any lenders that will give the amount i am after thanxs
For your borrowing needs, you may want to consider the lenders on our $5,000 personal loan page. Please do check the eligibility criteria of the loan product you are interested in before submitting an application.
Aside from the loans above, check out our page about $5,000 personal loans for you to compare your bad credit loan options for up to $5,000.
Keep in mind that every time you apply for a loan, it is listed on your credit file and too many rejected applications can be a bad sign to lenders. You may want to consider waiting before you apply for another one to give yourself a better chance of being approved.
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Do you really need a loan today?*
I have a 300 credit score and 2 defaults needing a loan
Hi Michell,
Thank you for reaching out to finder.
We are on the correct page for you to make a comparison on a table of providers in taking out a loan. Kindly review and compare your options on the table displaying the available providers. Once you have chosen a particular provider, you may then click on the “Go to site” button and you will be redirected to the provider’s website where you can proceed with the application or get in touch with their representatives for further inquiries you may have.
Before applying, please ensure that you meet all the eligibility criteria and read through the details of the needed requirements as well as the relevant Product Disclosure Statements/Terms and Conditions when comparing your options before making a decision on whether it is right for you. Hope this helps!
Cheers,
Reggie
Im wanting a provider who will help with a 15000 car loan with a poor credit raiting
Hi Teneal,
Thank you for your inquiry.
Though I can’t recommend one specific lender to you as we are a comparison website, you may be able to compare some lenders that offer car loans with bad credit. Please review the criteria and get in touch with the lender directly for the possible options available to you. When you are ready, you may then click on the “Go to site” button and you will be redirected to the lender’s website where you can proceed with the application or get in touch with their representatives for further inquiries you may have.
Hope this helps.
Cheers,
May
I have 2 defaults on my name from a stuiped furniture company, I gave back there furniture in excellent condition, and the defaulted me 2 times of $1400 I’m still paying them off, and I have a variable impact from Telstra on my name.
I’ve been approved for a $600 loan and almost done paying it off, I am I need of a $2000 loan where can I get one? Also I’m working and on single parenting
Hi Rebecca,
Thanks for contacting Finder.
You can check our list of payday loans for single parents. On the page, is a comparison table you can use to see which lender suits you. You can click the name of the lender or the “More info” link to be redirected to our review page and learn more about the lender’s loan offer, rates, and requirements as well as the pros and cons of using their loan service. When you are ready, you may then click on the “Go to site” button and you will be redirected to the lender’s website where you can proceed with the application or get in touch with their representatives for further inquiries you may have.
Before applying, please ensure that you meet all the eligibility criteria and read through the details of the needed requirements as well as the relevant Product Disclosure Statements/Terms and Conditions when comparing your options before making a decision on whether it is right for you. You can also contact the provider if you have specific questions.
I hope it helps.
Best regards,
Judith
Hi i currntly have car on fianance that i have been paying for the past year and have not missed or made a late payment a d now i a inneed of a $5000 loan for repairs but my credit rating is not so good i have bee employed for over 6 years fulltime is there any lenders that will give the amount i am after thanxs
Hi John,
Thanks for your question.
For your borrowing needs, you may want to consider the lenders on our $5,000 personal loan page. Please do check the eligibility criteria of the loan product you are interested in before submitting an application.
Cheers,
Anndy
So I need a loan in the amount of 3400 dollars to pay off all my debt and I’m self employed and I’ve applied to many but all declined.
Hi JP,
Aside from the loans above, check out our page about $5,000 personal loans for you to compare your bad credit loan options for up to $5,000.
Keep in mind that every time you apply for a loan, it is listed on your credit file and too many rejected applications can be a bad sign to lenders. You may want to consider waiting before you apply for another one to give yourself a better chance of being approved.
Hope this helps,
Elizabeth