Need a personal loan with bad credit? View your loan options

Need a personal loan with bad credit? View your loan options

Receiving a poor credit rating and being black-marked as a poor credit risk can be a serious matter, especially if you are looking to take out a mortgage or personal loan in the future.

Having a bad credit rating makes you look like a high risk to lending institutions, who will moderate that risk by charging you higher interest rates or refusing your application for a loan altogether.

What are bad credit loans?


Bad credit loans are designed for people with impaired credit files and bad credit histories. They are also provided to first home buyers and the self-employed, who lenders sometimes regard as higher-risk borrowers.

Mortgage brokers can help people with bad credit histories find some of the best personal loans and car loans on the market. If you have an impaired credit file or a poor credit history, a qualified broker may be able to provide some assistance.

Lenders that specialise in finance for people with bad credit histories can sometimes have bad reputations, because borrowers usually have to pay higher interest rates. However, this reflects the increased risk the lender is being asked to assume. If you feel more comfortable, you can apply for a loan at a major bank, but keep in mind that they usually have stricter criteria than other lenders, which might result in your application being rejected. Rejected loan applications can do further damage to your credit score, which can affect your future loan applications.

Regardless of where you apply, it’s important not to sign up a for a loan that you doubt you’d be able to repay. Missing or defaulting on your loan repayments can lead to financial problems and damage your credit score.

Here are five tips to keep in mind when taking out your loan to avoid impairing your credit rating any further:

  • Get an idea of how much you can safely borrow by using a personal loan calculator.
  • Once you know how large the payments will be, factor them into your weekly budget to make sure you can afford the repayments.
  • If there is any doubt that you will be able to afford the repayments, seriously consider if taking out the loan is in your best interests.
  • Choose the credit providers you apply for wisely, because if you are rejected, this will damage your rating even further.
  • Save up a reserve of funds to tide you through an emergency, so you can avoid defaulting on your loan.

RateCity Personal Loan Marketplace

There’s another way to search for a personal loan that suits your household finances. RateCity’s Personal Loan Marketplace lets you compare personal loans not just by their interest rates and fees, but by your estimated chance of being approved by the lender, all without affecting your credit score.

Simply enter your details to receive a list of personal loan options from different lenders in less than 60 seconds, based on your personal finances and credit history.

Other personal loan options for bad credit borrowers:

    • Secured personal loans– Using the value of your car or home to guarantee your loan can help you qualify for some personal loans when you have bad credit.
    • Guarantor personal loans– Some lenders allow borrowers with bad credit to take out personal loans that are guaranteed by a family member or friend. If you can’t pay back the loan, it’s the guarantor’s job to cover the cost.
    • Payday loans– For smaller amounts, some lenders are less concerned with your credit history as they are with your current finances. Remember that payday loans often have hefty penalties if you don’t pay on time, and you could risk further worsening your credit rating.

What is a bad credit rating?


Your credit rating comes from an assessment of several different factors. These include any outstanding debts or repayments you have not made, previous applications for credit and their status, as well as the types of credit and lenders you have applied to.

Common practices that damage a credit rating include:

  • Missing payments
  • Making late payments
  • Skipping payments
  • Exceeding card limits
  • Being careless about your bills
  • Making multiple credit applications at once

Having no credit history (e.g. having never applied for a credit card or loan before) can sometimes be considered “bad” credit by some lenders, and can limit your lender’s ability to predict whether you’ll be able to repay a credit card or loan. 

To avoid red tape and not fall into bad credit habits, experts recommend that you conduct regular reviews of your credit payment history.

How to find your credit rating and/or credit history:

There are several credit reporting agencies that keep track of the borrowing histories of Australians, and assign the credit ratings that lenders use when assessing credit applications.

These agencies include:

Contact one or more of these agencies for a copy of your credit history. You can usually request one free copy of your credit report per year, with additional requests incurring fees. You can also request a free copy of your credit report if you have been refused credit within the past 90 days, so you can find out the reason for your refusal.

What is comprehensive credit reporting?

From March 2014, the Australian credit system began to report credit history more comprehensively. Under the previous arrangement, it was not possible for positive repayment history to balance out any negative history. Even with a secured bad credit loan, your negligence would still be reported to the credit bureaus.

This is no longer the case as comprehensive credit reporting provides a more holistic view of your past payments. This may be beneficial to people with a bad credit rating who may have defaulted on a loan but have kept up with bill repayments regularly, as well as new borrowers with short of limited credit histories. 

Keep in mind that participation in comprehensive credit reporting is voluntary at time of writing, and that not every credit provider offers positive credit information to credit agencies.  

How to improve a bad credit rating:

  • Keep up to date with repayments and bills
  • Keep a regular job and residence
  • Build up your savings
  • Clear existing debts and avoid new debts
  • Correct any errors/inaccuracies on your credit report (contact the credit agency)

If you would like to compare more specific features on our extensive range of fixed-rate and variable rate loans, visit our personal loans comparison page.

How do I know if I've got a bad credit history?

You can find out what your credit history looks like by accessing what's known as your credit rating or credit score. You're also able to check your credit report for free once per year.

Can I get guaranteed approval for a bad credit personal loan?

Few, if any, lenders would be willing to give guaranteed approval for a bad credit personal loan. Borrowers with bad credit histories can have more complicated financial circumstances than other borrowers, so lenders will want time to study your application. 

It’s all about risk. When someone applies for a personal loan, the lender evaluates how likely that borrower would be to repay the money. Lenders are more willing to give personal loans to borrowers with good credit than bad credit because there’s a higher likelihood that the personal loan will be repaid. 

So a borrower with good credit is more likely to have a loan approved and to be approved faster, while a borrower with bad credit is less likely to have a loan approved and, if they are approved, may be approved slower.

What causes bad credit ratings/scores?

Failing to repay loans and bills will damage your credit score. So will falling behind on your repayments. Your credit score will also suffer if you apply for credit too often or have credit applications rejected.

Are there emergency loans with no credit checks?

While many personal loans require a credit check as part of the application process, some personal loans and payday loans have no credit checks, which may appeal to some borrowers with a bad credit score.

Keep in mind that even if a loan is available with no credit check, the lender will likely want to confirm that you can afford the repayments on your current income.

What are the pros and cons of bad credit personal loans?

In some instances, bad credit personal loans can help people with bad credit history to consolidate their debts, which can help make it easier for them to clear those debts. This is because the borrower might be able to consolidate several debts with higher interest rates (such as credit card loans) into one single debt with a lower interest rate and potentially fewer fees.

However, this strategy can backfire if the borrower spends the loaned funds instead of using it to repay the new loan. Another disadvantage of bad credit personal loans is that they have higher interest rates than regular personal loans.

Do $4000 loans have no credit checks?

Many medium amount loans for $4000 have no credit checks and are instead assessed based on your current ability to repay the loan, rather than by looking at your credit history. While these loans can appear attractive to bad credit borrowers, it’s important to remember that they often have high fees and can be costlier than other options.

Personal loans for $4000 are more likely to have longer loan terms and will require a credit check as part of the application process. Bad credit borrowers may see their $4000 loan applications declined or have to pay higher interest rates than good credit borrowers.

What is a credit rating/score?

Your credit rating or credit score is a number that summarises how credit-worthy you are based on your credit history.

The lower your score, the more likely you are to be denied a loan or forced to pay a higher interest rate.

What is a bad credit personal loan?

A bad credit personal loan is a personal loan designed for somebody with a bad credit history. This type of personal loan has higher interest rates than regular personal loans as well as higher fees.

Will comprehensive credit reporting change my credit score?

Comprehensive credit reporting may change your credit score, either positively or negatively, depending on an individual's situation.

Under comprehensive credit reporting, credit providers will share more information, both positive and negative, about how you and other Australians manage credit products. That means credit reporting bureaus will be able to make a more thorough assessment of everyone’s credit behaviour. That will lead to higher scores for some consumers and lower scores for others.

What is bad credit?

A person is deemed to have ‘bad credit’ when they have a poor history of managing credit and repaying debts.

What are the pros and cons of debt consolidation?

In some instances, debt consolidation can help borrowers reduce their repayments or simplify them. For example, someone might take out a $7,000 personal loan at an interest rate of 8 per cent so they can repay an existing $4,000 personal loan at 10 per cent and a $3,000 credit card loan at 20 per cent.

However, debt consolidation can backfire if the borrower spends the extra money instead of using it to repay the new loan.

How can I improve my credit rating/score?

Your credit score will improve if you demonstrate that you’ve become more credit-worthy. You can do that by minimising loan applications, clearing up defaults and paying bills on time.

Another tip is to get the one free credit report you’re entitled to each year – that way, you’ll be able to identify and fix any errors.

If you want to fix an error, the first thing you should do is speak with the credit reporting body, which may take care of the problem or contact credit providers on your behalf.

The next step would be to contact your credit provider. If that doesn’t work, you can refer the matter to the credit provider’s independent dispute resolution scheme, which would be the Australian Financial Complaints Authority (AFCA).

AFCA provides consumers and small businesses with fair, free and independent dispute resolution for financial complaints.

If that doesn’t work, your final options are to contact the Privacy Commissioner and then the Office of the Information Commissioner.

Can I get a personal loan if I receive Centrelink payments?

It is hard, but not impossible, to qualify for a personal loan if you receive Centrelink payments.

Some lenders won’t lend money to people who are on welfare. However, other lenders will simply consider Centrelink payments as another factor to weigh up when they assess a person’s capacity to repay a loan. You should check with any prospective lender about their criteria before making a personal loan application.

How long does it take to get a bad credit personal loan?

In the best-case scenario, an application for a bad credit personal loan can be made within minutes and then be approved within 24 hours. However, if a lender needs more information or needs more time to verify the provided documents, the application process may take longer.

Can I get an easy/instant personal loan?

Some lenders are able to approve applications with little documentation and within minutes. However, there is a catch. People who take out easy/instant loans generally pay higher interest rates and are restricted to lower amounts than people who follow a traditional borrowing process.

How do I find out my credit rating/score?

You're entitled to one free credit report per year from credit reporting bodies like Equifax, Dun & Bradstreet, Experian and the Tasmanian Collection Service. You can also get a free report if you’ve been refused credit in the past 90 days.

Credit reporting bodies have up to 10 days to provide reports. If you want to access your report sooner, you’ll probably have to pay.

What is credit history?

Your credit history covers everything to do with applying for loans. It includes the number of loans you’ve applied for, the amounts you’ve borrowed and your record of meeting repayment schedules.

What causes bad credit history?

Bad credit history is caused by filing for bankruptcy, defaulting on your debts, falling behind on your repayments and having loan applications rejected. Lenders are wary of borrowers who demonstrate this sort of behaviour because it suggests they might struggle to repay future loans.

Borrowers with bad credit may find it more difficult to be approved for a loan, or they may get higher interest rates when they do get approved.

What are the pros and cons of personal loans?

The advantages of personal loans are that they’re easier to obtain than mortgages and usually have lower interest rates than credit cards.

One disadvantage with personal loans is that you have to go through a formal application process, unlike when you borrow money on your credit card. Another disadvantage is that you’ll be charged a higher interest rate than if you borrowed the money as part of a mortgage.

Can I get a no credit check personal loan?

Personal loans with no credit checks are available and called ‘payday loans’. These are sometimes used as short-term solutions for cash-strapped Australians. They often carry higher interest rates and fees than regular personal loans, and individuals risk putting themselves into a worsened cycle of debt.

Did you find this helpful? Why not share this article?



Money Health Newsletter

Subscribe for news, tips and expert opinions to help you make smarter financial decisions

By signing up, you agree to the Privacy & Cookies Policy and Terms of Use, Disclaimer & Privacy Policy