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How to Apply for a Loan With Bad Credit

Mar 7, 2022 | Finance Tips

Applying to borrow money can be daunting, especially if you already have a bad credit history or have been refused credit in the past. Bad credit doesn’t need to be a barrier in applying for a loan, though.

Whether it’s a Personal Loan, Car Loan or even a Business Loan, there are steps you can take to improve your chances of approval and there are lenders out there who are prepared to work with you, where possible.

Read on to learn about our tips on how you can help bolster your chances of loan approval.

Our best tips on how to help you get a Car Loan with bad credit (or any other loan!)

There are many ways that you can help improve your chances of securing finance.
We’re happy to share our best tips with you on how to help you get approved for a loan, even with bad credit.

Keep your bank account in the green

We understand that it doesn’t take much to send your creditworthiness into a nosedive. Something like missing Car Loan repayments a couple of times or even a failed business venture can seriously affect someone who previously had a good credit history. Not to mention those that have entered into Part IX Debt Agreements or who are discharged bankrupts. It can take a long time to ride out the poor credit wave as credit defaults are recorded for five years on your file and missed payments stay on there for two years!

If you have stable finances now but are still suffering from yesteryear’s struggles, let your bank statements demonstrate your ability to budget, save, and keep on top of your financial commitments. Having no overdrawn accounts for at least a year can be a huge plus when it comes to showing you’re better with your money than your credit report may indicate.

This also goes for anyone with little to no credit history. Consider adults who’ve only just become a permanent resident, or perhaps a young person looking to buy their first car — it can sometimes be hard to demonstrate your worthiness to lend money to with an empty credit file.

Show a stable employment history

Jumping from job to job is sometimes unavoidable, particularly if your work has been affected by COVID-19. If you’ve had lots of changes in your employment recently, lenders may look at this as unstable income and may not be as willing to lend you money as if you’ve held down the same job for 12 months or longer.

Employment history can be one of the biggest reasons that sole-traders find it difficult to access loans, and why many come to Finance One after being turned away from multiple lenders elsewhere.

Consider putting down a cash deposit

Putting down a deposit in cash at the start of your loan may help you get your application across the line, particularly if you’re applying for a Car Loan or Business Loan, and so long as you have satisfied all other normal lending requirements. Not only will this effectively decrease your loan amount, but most lenders will likely consider a deposit as a demonstration of your ability to manage money and your commitment to a new loan.


Review your credit history with a credit reporting agency

Sometimes what’s holding you back can be fixed as easily as making a phone call. By reviewing your file with a credit reporting agency, you may be able to see exactly what’s got you off track and whether there are any defaults listed in error that can be removed or incorrect information that can be straightened out.

If your research shows that you have unpaid defaults, you may have the opportunity to pay these off before striking another credit check on your report.

Beware of companies who claim to wash or wipe your credit, as they hold no more power than you do and will charge you handsomely for making the same phone call you can make yourself.

Go for a lower loan amount

This one seems like a no-brainer, but a lower outstanding loan balance means less to repay and generally a better chance of being approved. For example, if you’re looking at a new car or business equipment, why not consider a second-hand option? There are some fantastic quality used cars and machinery out there for a fraction of the price.


Consider what loan type works best for you

If you’re looking for car finance, then choosing between a Personal Loan or Car Loan could be the difference between being approved or declined. Our Australian Credit Licence gives us the ability to educate you on both Personal Loans and Car Loans, however, we cannot provide personal financial advice regarding the suitability of a particular credit product for your unique circumstances. However, there are pros and cons of both types of loans and you may be able to help your chances of being approved for a loan by doing your research and seeking independent legal and financial advice.

Unsecured Loans can be a little bit more difficult to get approved for, as they don’t give your credit provider any asset to hold a legal claim to, in the event that you default and can’t repay the loan. So if you’re looking at buying a new or used car, and already have a low credit score, a Secured Car Loan may be best.

However, a Personal Loan may provide you more flexibility and you may have the option to possibly borrow slightly more than the car’s worth to be able to put towards other purchases you’ve had on your wish list or to even consolidate other small debts.

Car Loans for bad credit can be one of the ways you get into your dream car, sooner.

Check you can afford the repayments

Loans for bad credit are often more affordable than you think, but of course, it’s wise to make sure you can afford the loan repayments before applying. Check out our loan repayment calculator. With no early repayment fees, our loan options could mean that you get ahead and help start to improve your bad credit rating.

Talk to us about our Loan Options


Is my loan application affected by my credit score?

When you apply for credit, whether it’s to get a mobile phone plan, a credit card or a car loan for bad credit, the lender will run a credit check to access and assess your credit rating. If you happen to have a bad credit history, many lenders may decline your application. This is because a poor score on your credit file could indicate you have had financial difficulty in the past and may not be a creditworthy person to lend further money to.

For lenders such as Finance One, we do take into account your score, but are more compassionate and personalised in our approach, by looking at your full financial situation before hitting the decline button on your application.

Those with a bad credit score will often attract higher interest rates than those with good credit scores, which makes comparing loans difficult as the usual market interest rate typically doesn’t apply to them.

Am I eligible for a Loan with bad credit?

Check to see if you might be eligible to apply for a loan through Finance One:

  • Do you have regular, consistent income?
  • Do you want to borrow somewhere between $5,000 – $75,000*?
  • Are you at least 18 years old?

If you answered ‘YES’ to all three, then chances are, we may be able to help you secure finance. Even if you have poor credit history, Finance One can consider borrowers with low credit scores.

We are proud to be a finance company that separates ourselves from others, and can try to help you out when other lenders can’t, even if you:

  • have defaults on your credit file,
  • have previously had a Part IX Debt Agreement,
  • have a checkered credit history.

Apply now to experience the Finance One difference.


*Vehicle Loans between $50,000 to $75,000 must be asset backed. Personal loans above $15,000 must be secured. Normal lending criteria apply. Fees and charges payable. Terms and conditions apply.

Apply Now

Disclaimer: The information above is of a general nature only and does not consider your personal objectives, financial situation or particular needs. You should consider seeking independent legal, financial, taxation or other advice to check how the information relates to your particular circumstances. We do not accept responsibility for any loss arising from the use of, or reliance on, the information.

Normal lending criteria apply. Fees and charges are payable. Terms and conditions apply.

Finance One means “Fin One Pty Ltd – ABN: 80 139 719 903 – ACL: 387528”

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Makala Elliott

Makala is the Marketing Manager at Finance One. She has worked in the Finance and Lending industry for over 10 years, gathering a wealth of experience. She is passionate about helping Australians get back on track with their finances by passing on her knowledge.

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