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How to apply for a Personal Loan with bad credit

Aug 21, 2021 | Finance Tips

Personal loans for bad credit may not be as hard to apply for as you might think. Read on to find out how you can apply for a Personal Loan, whatever your credit history. 



You may have heard that you can’t get Personal Loans for bad credit in Australia, but there may actually be a number of great options out there.

Even with a poor credit history, you may be eligible to apply for a Personal Loan to suit your needs, provided you can meet the eligibility requirements such as having a steady income stream and providing documents proving your identity, to get started.

Take a look at some of the causes of bad credit and different ways to work around this situation to be eligible to apply for a Personal Loan.

What is bad credit?

Your credit score, in a nutshell, is generally your history of paying bills and repaying loans. If you have had trouble keeping up with your financial commitments, this can result in a bad credit history. Ending up in this position can happen all too easily, even to those with the best intentions. Even bills that you haven’t paid because they were being sent to the wrong address, and you never knew about them, can count towards your credit history.

The good news is bad credit doesn’t have to be forever. By paying your bills promptly and repaying your loans, your credit can improve and lenders may have the opportunity to look on you more favourably again. Ironically, one of the best ways to improve your credit score may be to consider taking out a new loan. By repaying this new loan promptly and regularly, you can begin to show that you are reliable and your credit score may improve again as a result. This doesn’t mean you should borrow a large amount for the sake of it though. A smaller loan repaid consistently might be your best bet if you want to use a loan as a strategy to help repair your bad credit rating.

Generally, your best steps to help maintain or improve your credit score include:

  • Paying your bills on time: One of the first steps to helping fix your credit score is to assess all your bills and make sure that they are paid on or before their due dates every month. You might like to cut back any spending that may not be necessary and automate payments if you can.
  • Minimising your credit: The fewer lines of credit you have, the more favourable your history will most likely become. This means not only paying your credit card bill regularly but minimising your credit usage. A good rule of thumb can be to keep your credit usage down to 10% or less, depending on your situation. So, on your $5,000 credit card, you could try to have at least $4,500 available at the end of every payment cycle.
  • Taking your time: As painful as it is, time can be the best way to heal your credit score. If you can try to have many months or years of minimum credit usage, timely bill payments and bills paid in full, you may begin to grow a stronger credit record.
What if I don’t have time to repair my bad credit score?

If you need a cash boost sooner rather than later, you may wish to look at applying for a Personal Loan for bad credit.

A Personal Loan for bad credit can be specifically designed for people with a problematic credit history. These types of loans can sometimes help to improve your credit score, provided you make your payments on time and stick to the terms of your loan agreement. But make sure you are comfortable with the repayment terms and the loan terms before you commit to a loan agreement.
There are a couple of important things you may want to look out for in a Personal Loan for bad credit:

1. Flexibility:
First, you may wish to look for flexibility. A loan that can be paid off early can usually save you a lot of money in the long run, if you want to get ahead with your payments. The sooner your loan is paid off, the less interest you pay so getting it paid off early is generally always a bonus.

2. Ethical Lender:
Next, you may want to make sure that you find a reputable and ethical lender. Unscrupulous lenders will pack their loans with hidden fees and loopholes that may end up costing you a lot more than you bargained for.

3. Customer Service:
Great lenders will work with you and keep you informed as to exactly what you will owe and what your regular repayments will be. They will also be transparent about your loan and will ensure that you understand how it works. They may even be able to discuss your options with you to help you stay on track with your loan if you get into a tight spot financially.

Who to choose as your lender when applying for a Personal Loan for bad credit

Finance One has a special focus on Personal Loans for bad credit. You could apply for a Personal Loan with Finance One for your vehicle repairs, your next travel plans, your big wedding day or any other worthwhile cause.

Finance One has a special focus on Personal Loans for bad credit. You could apply for a Personal Loan with Finance One for your vehicle repairs, your next travel plans, your big wedding day or any other worthwhile cause. Our Customer Service Agents are based in Australia and will work closely with you from your very first enquiry to your last repayment, to ensure you receive assistance to suit your personal needs. Learn more about our Personal Loans for customers with a bad credit history here  https://financeone.com.au/bad-credit-personal-loans/.

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.

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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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