When you have a less than average credit score, searching for a credit card can feel like dodging an ‘approval’ mine field. However, you can still apply for a credit card online or in a branch with bad credit, and there are still credit card providers who will approve you – you just have to do your research first.
Can I get a no credit check credit card?
It is extremely rare to get any financial product in Australia without a credit check. This idea is typically limited to ‘payday loans’, which are sometimes used as short-term solutions for cash-strapped Australians. They carry a range of risks, including putting individuals into a worsened cycle of debt due to higher than average fees.
However, this does not mean that you won’t be approved for a credit card if you have bad credit. Some lenders will provide credit cards to Australians with bad credit scores, but it all depends on the lender’s individual eligibility criteria.
Warning – don’t apply just yet!
Every time you apply for a credit card (or any financial product) the lender will perform a ‘hard’ inquiry on your credit report. If you are rejected, this will negatively impact your credit score and show up on your credit history for up to 12 months.
Ensure you’ve researched the credit card rates, fees and features, the lender’s eligibility criteria (minimum income requirements etc.) and that you’ve presented yourself as a reliable borrower before applying.
Why do banks perform credit checks?
Financial providers perform credit checks to determine your credit-worthiness. This is to protect themselves as well as you. They want to provide financial products to individuals who are likely to pay their bills and not overdraw their accounts. Lenders also don’t want you to fall into debt and negatively impact your credit score, as well as your livelihood.
- Excellent – you are highly unlikely to have any adverse events harming your credit score in the next 12 months;
- Very good – you are unlikely to have an adverse event in the next 12 months;
- Good – you are less likely to experience an adverse event on your credit report in the next year;
- Average – you are likely to experience an adverse event in the next year; and
- Below average – you are more likely to have an adverse event being listed on your credit report in the next year.”
Where do I get bad-credit credit cards with no credit check?
You won’t be able to get a credit card with no credit check, but you can search and compare bad-credit credit cards by utilising comparison tools.
RateCity’s bad-credit credit card comparison table helps you to find competitive credit card options for your financial needs. Comparison tables let you add search filters for your personal finances, examine credit card interest rates, fees and features, and also read reviews of the presented credit cards.
How can I improve my credit score?
Your credit score will improve if you demonstrate that you’ve become more credit-worthy. You can do that by minimising credit applications, clearing up defaults and paying bills on time.
If you have a bad credit score, you can try doing the following things before applying for a credit card:
- Pay off your debts – credit card providers examine your personal finances to determine your credit-worthiness, so if you have any outstanding debts this may reflect negatively against you. However, this is a reality for many Australians. If you’re consistent with making regular repayments – more than the minimum requirements if possible – then providers will see you have stability in your finances. This can also increase your chances of improving your credit score.
- Get your free credit report – every Australian is entitled to one free credit report per year. It’s crucial that you go through your credit report and look for any errors as it’s not uncommon for them to contain mistakes, such as having the debt of a family member with a similar name credited to you. Learn more about credit scores here.
- Check the minimum income requirements – credit card providers look at your annual income amount, as well as your occupation, so you won’t necessarily be rejected if you have part-time or casual work. Minimum income requirements tend to be between $30,000 – $40,000 for standard and rewards credit cards, however low income credit cards can have minimum income requirements as low as $15,000 per year.
Who offers credit cards for bad credit with guaranteed approval?
Guaranteed approval is impossible to come by in Australia, and there is no universal definition of bad credit. Each lender will have their own criteria around bad credit classifications, and how this determines your eligibility and chance of approval.
This is the same for instant approval, credit cards. They may be possible to get – but please note that the term may be misleading. “Instant” approval tends to mean that when you apply online the lender will let you know the likeliness of your eligibility for a credit card within 60 seconds of receiving your application.
Do you need financial counselling?
If you’ve got bad credit and you find yourself in a dire financial situation, it may be wise to seek financial counselling before applying for any further loans or credit cards. To find your nearest financial counsellor, or for more information, please visit ASIC’s MoneySmart website.