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How to get a loan with bad credit in Australia

How to get a loan with bad credit

How to get a loan with bad credit: some context in Australia

In Australia, when your credit score falls below a certain threshold, you’re categorised as a high-risk borrower. This can happen if you’ve missed bill payments, defaulted on loans, declared bankruptcy, or consistently made late payments.

Low credit score means you’re a riskier customer, which might make it more difficult to get a loan or secure favourable loan terms. So, before you make any decisions, it’s crucial to shop around and thoroughly understand the specifics of the loan you need.

How to get a loan with bad credit: general steps

You can follow the following steps to apply for a loan:

1.   Check Your Score

Check your credit score through credit reporting bodies like Equifax, Experian or Illion and improve it. Understanding your credit score will help you determine your creditworthiness and the type of loan you can get.

2.   Collect Documents

Gather all the necessary documents like identity proof, bank statements, proof of income, etc to streamline the process.

3.   Do Thorough Research

Investigate possible lenders and compare them on parameters like collateral requirement, interest rates and fees charged. Review all your options, and take advice from a credit helpline to make an informed decision.

You should also research the available loan options and choose the right kind of loan by considering different interest rate options, fees levied, repayment terms, and borrowing limits.

4.   Apply for the Loan

After considering all the points mentioned above, you may proceed to apply for a loan. Be prepared for a potential credit check as part of the application process, and ensure you thoroughly review the loan terms and conditions before submitting your offer¹ to borrow.

What types of loans can you get with a bad credit score?

You can still obtain various types of loans with poor credit history, but not all lenders will consider your application. Options include poor credit business loans, home loans, car loans, debt consolidation loans, and personal loans.

While loans for individuals with poor credit history can seem like a lifeline, it’s important to be aware of the risks involved. Lenders often offset the increased risk of lending to those with poor credit by charging higher interest rates. These higher rates can become a significant issue over time, particularly for long-term loans such as home loans.

Applying with a poor credit history can impact your credit score because each loan application requires a credit check. Multiple applications within a short period can negatively affect your credit score.

Also, it’s important to stay cautious of loan scams and fraudulent practices. You must research the lender and verify their licensing before proceeding with the loan application.²

Alternatives to Loans for Poor Credit

If you have poor credit, before going to a lender, you can get help from friends or family to get more flexibility and lenient repayment terms. You can also explore credit card lending, credit unions, and peer-to-peer lending. You also have the option of applying for secured loans that require assets as collateral.

You can check for your eligibility for Government assistance programs like No-Interest Loans Scheme (NILS) funding which provides small, interest-free loans. NILS have 0% interest and no fees making them a very affordable option for people with bad credit.³

While you’re looking for financing options for your immediate needs, to open up more borrowing opportunities in future, you can:

• work on improving your credit score by making timely repayments, reducing credit card balances and avoiding credit card applications if not necessary, and
• seek financial counselling offered by the National Debt helpline to get personalised advice and adopt debt management strategies.

How to get a personal loan with poor credit

If you have a poor credit score, you may still be able to get a loan with Credit24. With an easy online process, you can receive quick approvals, based on your eligibility. If your application is approved, you can typically get the money in your account within 24 hours.

You can use our loan calculator to see the possible repayment amounts. You have the option of choosing between weekly, fortnightly and monthly repayment options. Your repayments are fixed upfront, making it easier for you to create and stick to a budget.

You can apply to borrow between $500 and $10,000 and repay over 36 months or make early repayments with no early repayment penalties. Funds may be transferred within 60 seconds of loan approval.

To complete the online application, we need your-

• Mobile number
• Email address
• ID (driver’s license details, Medicare Card or passport number)
• Bank statements for the last three months obtained through Illion’s secure portal.

Remember Credit24 conducts a credit check on all applications which will show as an enquiry on your credit file.

If you think you might have unpaid defaults that could affect your loan application, you can obtain a free copy of your file from www.mycreditfile.com.au

Learn more about Credit24

Disclaimer:
IPF Digital Australia Pty Ltd, trading as Credit24, ABN 59 130 894 405. Australian Credit Licence 422839. The information in this article is of general nature and does not take into consideration your objectives, financial situation or needs. Lending criteria, fees and charges apply. For more information about our products, eligibility criteria and terms and conditions, please visit www.credit24.com.au.

Sources:

• Nerdwallet, Getting a personal loan with bad credit in Australia
• The Mortgage Agency, Bad Credit Loans: A Comprehensive Guide For Borrowers In Australia
• Moneysmart.gov.au, No-Interest Loans Scheme (NILS)