Credit card options when you have bad credit
Discover your credit card options when you have bad credit. Learn about rebuilding your credit history if you have bad credit.
If you have bad credit score, applying for a credit card can be a difficult and stressful process, but it’s not impossible.
If you think you may have bad credit and you’re in the market for a credit card, it’s important to compare all your options and do your research first, especially around your credit score. This can help ensure you’re getting the most competitive product and not further negatively impacting your credit rating.
Here’s what you need to know about getting a credit card if you think you have a bad credit score in Australia.
Can I get a credit card with bad credit?
Short answer - yes, but it can be a difficult process as it depends on each credit card provider’s eligibility criteria. As your credit file is checked every time you apply for a credit card, a bad credit score can affect your chances and can complicate the process.
Are there credit card providers who don’t perform a credit check?
In Australia, it’s not currently possible to get a credit card from a lower-risk provider without a credit check. However, there are ‘no credit check’ providers out there – also known as payday lenders.
While this may seem inconvenient, it’s in your best interest if you’ve got bad credit. If you are rejected by a credit card provider this can negatively impact your credit score. Making an application for a credit card when you have bad credit, and then being rejected, may make matters worse.
Instead you could look to lenders or platforms that perform ‘soft’ checks (pre-qualifications showing your chance of approval) that won’t show up on your credit history, and try to apply for credit cards that better suit your financial situation.
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. Read on to learn how to best avoid hurting your credit score further...
How can I get a credit card with bad credit?
To help improve your chance of approval and decrease your risk of negatively impacting your credit score, you should utilise comparison tools to find credit cards that suit your financial situation i.e. targeted to low income earners, people with bad credit etc.
RateCity.com.au’s credit card comparison table allows you to search, filter and compare competitive credit card options that suit people with bad credit. Use this tool to search through credit card interest rates, as well as read product reviews, who the credit cards are suitable for and what minimum income requirements could be.
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.
How do I get approved for a credit card for bad credit?
There are a few things you can do to improve your chance of approval when applying for a credit card with bad credit.
- Pay your debts
When a lender assesses your credit card application, they’ll look at your repayment history on any other cards or loans you have. If you can show that you’ve been consistent with meeting your repayments and paying off more than the minimum monthly credit card repayment, you may have a better chance at improving your credit rating, and therefore being approved.
If you have multiple sources of debt (personal loan, credit card etc.) you should focus on one debt at a time and budget to pay it off. Once you know how much you owe, you should set money aside to pay one debt off at a time, starting with the debt with the highest interest rate first. If you have any additional cash left over at the end of your pay cycle, put it towards the debt as well. Learn more about how to repair your credit score here.
- Wait until you can afford the repayments
In Australia, a lender can’t legally give you a credit card unless you have enough annual income to meet the card’s minimum repayments. If you don’t have a regular income or can’t prove your income, it’s best to hold off applying for a credit card until you’re in a better position.
Alternatively, you can compare credit card options for those with low annual income here.
- Go through your credit history
It’s not uncommon for credit reports to contain mistakes. One of the most common errors can involve your name being credited with the debt of a family member or stranger with a very similar name to yours. You can also add positive information to your credit report that shows stability in your personal and financial life, such as a full-time job, being married, owning a home and living at one address for a number of years.
Working on clearing your bad credit rating can make applying for a credit card in the future a much simpler process.
- Get saving
Lenders will go through your bank statements to determine your eligibility, so if you’re able to show that you have some savings, you’ll demonstrate that you can stick to a budget and have self-control with your finances.
What other options are available?
If you're not confident that a credit card is the right choice for your financial needs, you could consider other financial products, such as personal loans. Learn more about applying for a personal loan with bad credit here.
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.
A professional financial counsellor can help you work through a debt consolidation plan and help facilitate smarter choices to clear your bad debt. If you know you’ve got bad debt and you’re struggling to make repayments, contact your lender. A proactive approach may help put a plan in place before it’s too late.
To find your nearest financial counsellor, or for more information, please visit ASIC’s MoneySmart website.
The following credit card offers are not specifically bad credit credit cards. We’ve shown you these credit cards to help you compare what’s available in the Australian credit card market, and make a more informed financial decision.
If you have bad credit, before you apply for a credit card, consider checking your credit report, taking some time to improve your credit history, or contacting a lender to learn more about their credit requirements. If you need more help, you can also contact a financial counsellor.
Can I get a credit card with bad credit?
Yes, some lenders will provide credit cards to Australians with bad credit scores. It depends on the provider's individual lending criteria and whether you’ve presented your personal finances to show you’re an ‘ideal’ applicant.
How to get rid of credit card debt
- Calculate your debt. Credit card calculators make it easy to determine the repayments required to chip away at your debt in the shortest timeframe possible for your budget.
- Repayment plans. Take some time to formulate a credit repayment plan. Consider increasing your income, scaling back your lifestyle or refinancing.
- Talk to your credit provider. If you’re still struggling with your debt, give your credit provider a call. You may be able to come to a new arrangement.
How easy is it to get a credit card?
For most Australians, there are no great barriers to applying for and getting approved for a credit card. Here are some points that a lender will consider when assessing your credit card application.
Credit score: A bad credit score is not the be all and end all of your application, but it may stop you being approved for a higher credit limit. If your credit score is less than perfect, apply for the credit limit that you need, rather than the one you want.
Annual income: Most credit cards have minimum annual income requirements. Make sure you’re applying for a card where you meet the minimum.
Age & residency: You need to be at least 18 years old to apply for a credit card in Australia, and most require that you are an Australian citizen or permanent resident. However, there are some credit cards available to temporary residents.
What should you do if your credit card is compromised?
Credit card fraud is a serious problem. If your credit card is compromised and you’re wondering what to do, here are a few precautionary steps to take.
Contact you credit provider – Get in touch will your credit card provider. If you feel your card has been compromised, you should be able to lock or block it.
Monitor your accounts – Keep an eye on your credit card accounts. Any unauthorised transactions could be a sign your credit card has been compromised.
Check your credit rating – It’s also important to check your credit rating, to ensure you’re not a victim of identity theft or some other financial mischief.
Do you need a credit card to get a loan?
You do not need a credit card to get a loan, but you usually need to have a credit history. Without a credit history, a financial institution cannot assess your ‘credit worthiness’, or your capacity to pay off the loan.
If you don’t have a credit card, your credit history can reflect any record of paying off an asset. Without any credit credit history, you’re limited in the type of loans you can apply for. But you may be able to obtain a secured loan against an asset. For more information on improving your credit score, go here.