How Do You Get a Personal Loan With a Bad Credit in Australia?

 How often have you wondered about your bad credit score getting in the way of getting that loan? Meanwhile, someone with a good credit score will undoubtedly get the loan much easier. And, bad credit can affect your loan application, but it should not prohibit you from availing of it. 

There are ways you can find lenders to sanction your loan despite having a bad score. So, here you will learn everything about bad credit personal loans in Australia. 

What Is Bad Credit?

According to the Australian Bureau of Statistics’ lending indicators, the top three loan requirements in Australia are for housing, personal, and business purposes. Meanwhile, credit scores are a way for lenders to keep track of your borrowing and repaying behaviour. And in Australia, the credit reporting agencies are responsible for compiling all your credit history into a report. Based on that, lenders can choose to lend you money or refuse it. 

The report describes your credit history along with other information like your age and location. Any score above 750 is considered excellent and will get you loans quickly. And a score between 580 and 669 is deemed “fair”, and anything below 580 is regarded as a bad score. 

When you have a bad score, any financial institution will be reluctant to grant you a loan. This is because a bad credit score makes them believe that you will not be able to repay. 

What Causes a Bad Credit Score?

Various events can give you a bad credit score. These include:

  • Missing your loan repayment date, including your credit card loan.

  • Getting your credit application denied.

  • If you had many credit checks in a short span of time.

  • Going bankrupt.

So how do you apply for a personal loan if you have landed in any of these situations?

Getting a Personal Loan on Bad Credit

Getting a bad credit personal loan is no cakewalk. This is particularly true when you try to get loans from the major banks in Australia. However, it is still possible to locate lenders who will lend you money despite your poor credit history. In fact, some lenders mainly specialise in this type of lending. 

Where’s the catch? 

The only issue with a bad credit personal loan, however, is the higher rate of interest. Also, a borrower with a bad credit history will have to provide additional security against the loan. 

Here are a few things you need to remember:

  • The lending policy varies depending on the lender.

  • The general difficulty is getting a personal loan above $50000 with bad credit. 

  • The application process will be stringent even if the lenders are sympathetic towards you.

  • The interest rate will be higher than if you got a good credit personal loan.

Final Words of Advice

Each time you apply for credit, the lender leaves a mark on your credit file. And when you get rejected, that also leaves a negative impact on your credit score. So, if you want to increase your chances of getting approved, make sure to address the issues in your credit history before the bank does and explain the reason behind the situation. Additionally, try to reduce the debts and limit of your credit card if it is too high. Also, practice smart saving diligently for at least three to six months before applying for the loan. 

When you apply for a personal loan, you want your lenders to see that you have good savings. So, make sure to provide them with enough evidence and stick to your budget plan.  Remember, it’s important to consolidate all your existing debts before borrowing any money. This way, getting a loan will be a cakewalk every time!