Bad credit credit cards
Learn more about getting a credit card with bad credit and compare low rate credit cards.
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.
Before you apply:
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.
What happens if I have a bad credit score?
If you have a bad credit score, you might encounter two main problems. First, the lower your credit score, the more likely you are to be rejected when you apply for a loan or any other credit product. Second, if your application is accepted, the less likely you are to qualify for the lowest interest rates.
Why should I check my credit rating?
There are two reasons you should check your credit rating: so you have a better understanding of your financial position, and so you can take action (if necessary) to improve your credit rating.
Lenders use credit ratings or credit scores to assess loan applications. The higher your score, the more likely you are to get approved, and the more likely you are to be charged lower interest rates and lower fees. Conversely, the lower your credit score, the less likely you are to get approved, and the more likely you are to be charged higher interest rates and higher fees.
Why do different credit reporting bureaus use different scores?
The reason Equifax, Experian and Illion use different scores is because they are independent companies with their own different methodologies. As a result, a score of, say, 700 would mean different things at different credit reporting bureaus.
However, the one thing they have in common is that they divide their scores into five tiers. So if you receive a tier-two credit score from one bureau, you will probably receive a tier-two score from the others, as well.
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.
Are credit checks mandatory?
In Australia it is impossible to get a credit card without the provider performing a credit check first. This is for your benefit, as it helps to prevent you from falling into avoidable debt.
How to get a new credit card
To get a new credit card, generally you need to be at least 18 years old and have a good credit rating. You don’t need to be an Australian citizen. Usually you can apply online or in person at a branch of the card issuer. You’ll typically have to supply information like:
- Your income and living costs (e.g. rent/mortgage, loan repayments, living expenses)
- Your employer’s contact details
- Details of your assets and any debts you are paying off
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.
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.
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.
How do you use credit cards?
A credit card can be an easy way to make purchases online, in person or over the phone. When used properly, a credit card can even help you manage your cash flow. But before applying for a credit card, it’s good to know how they work. A credit card is essentially a personal line of credit which lets you buy things and pay for them later. As a card holder, you’ll be given a credit limit and (potentially) charged interest on the money the bank lends you. At the end of each billing period, the bank will send you a statement which shows your outstanding balance and the minimum amount you need to pay back. If you don’t pay back the full balance amount, the bank will begin charging you interest.
Can a pensioner get a credit card?
It is possible to get a credit card as a pensioner. There are some factors to keep in mind, including:
- Annual income. Look for credit cards with minimum annual income requirements you can meet.
- Annual fees. If high fees are a concern for you, opt for a card with a low or $0 annual fee.
- Interest rate. Make sure you won’t have any nasty surprises on your credit card bill. Compare cards with a low interest rates to minimise risk.
What should you do when you lose your credit card?
Losing your credit card is a serious situation, and could land you in financial trouble. Here is a simple guide detailing what to do when you lose your credit card.
Lock you card – Contact your provider and inform them about your lost credit card. From here lock, block or cancel your card.
Keep track of transactions – Look out for unauthorised credit card transactions. Most banks protect against fraudulent transactions.
Address recurring charges – If your card is linked to recurring charges (gym membership, rent, utilities), contact those businesses.
Check credit rate – To ensure you’re not the victim of identity theft, check your credit rating a month or two after you lose your credit card.
How to get a credit card for the first time
A credit card can be a useful financial tool, provided you understand the risks and can meet repayment obligations.
If you’re a credit card first-timer, review your options. Think about what kind of credit card would suit your lifestyle, and compare providers by fees, perks and repayments.
Once you’ve selected a card, it’s time to apply. Credit card applications can generally be completed in store, online or over the phone.
When you apply for a credit card for the first time, you must meet age, residency and income requirements. As proof, you must also provide documentation such as bank account statements.
How do you apply for a credit card?
You can apply for a credit card online, over the phone or in person at the bank. Once you’ve compared the current credit card offers, the application process is quick and easy. Before you get your application started, you’ll need to gather your personal information like proof of ID, payslips and bank statements, proof of employment and details of your income, assets and liabilities. To be eligible for a credit card, you’ll need to be an Australian citizen over 18 and earn a minimum of $15,000 each year. Once you’ve applied for a credit card, you should get a response fairly instantly. If your credit card application has been approved, you should receive a welcome pack with your new credit card within 10-15 days.
Should I get a credit card?
Once you've compared credit card interest rates and deals and found the right card for you, the actual process of getting a credit card is quite straightforward. You can apply for a credit card online, over the phone or in person at a bank branch.
Can I get a credit card on part-time/casual work?
Yes, as credit card providers look at your annual income amount as well as your occupation. 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.
How do credit cards work?
Think of credit cards as a short-term loan where you use the bank’s money to buy something up front and then pay for it later. Unlike a debit card which uses your own money to pay, a credit card essentially borrows the bank’s money to fund the purchase. When you apply for a credit card, the bank assesses your income and assigns you a credit limit based on what you can afford to pay back. At the end of each billing cycle, which is usually monthly, the bank will send you a statement showing the minimum amount you have to pay back, including any interest payable on the balance.
How do you use a credit card?
Credit cards are a quick and convenient way to pay for items in store, online or over the phone. You can use a credit card as a cashless way to pay for goods or services, both locally and overseas. You can also use a credit card to make a cash advance, which gives you the flexibility to withdraw cash from your credit card account. Because a credit card uses the bank’s funds instead of your own, you will be charged interest on the money you spend – unless you pay off the entire debt within the interest-free period. If you pay the minimum monthly repayment, you will be charged interest. There are many different credit card options on the market, all offering different interest rates and reward options.
What's the best credit card for rewards?
There is no one-size-fits-all best rewards credit card. It's best you research what type of rewards program you'd like, as well as the fees, interest rate and conditions associated with those types of cards before making a choice.
Rewards credit cards can also come with high annual fees that may end up nullifying the rewards, so think how often you use the card to decide whether the benefits outweigh the extra cost for you. A card with a lower annual fee might require a lot of spending to get any useful rewards, while another card with a higher annual fee might need fewer purchases to get a reward.
How many numbers are on a credit card?
The numbers on your credit card actually follow a universal standard which is used to identify specific functions. Each credit card has a different amount of numbers. Visa and Mastercard have 16, American Express has 15 and Diner’s Club has 14.
The first number on a credit card always identifies what type of credit card it is. Visa cards start with a 4, whereas Mastercard starts with a 5 and American Express with a 3. The remainder of the digits represent the account number, including the last number which is used to verify that your credit card is actually valid.
Credit cards also have additional verification numbers, which are mainly used when the card isn’t present for phone and online purchases. These are the three-digit numbers on the back of Visa and MasterCard or the four-digit numbers on the front of an American Express card.