Life doesn’t always go according to plan. Unfortunately, when things in life go wrong, it can have a significant impact on a person’s credit rating.
Even if your bad credit history is due to circumstances beyond your control, the mark it leaves can stick around for years.
For people looking to access short-term personal finance, a bad credit history is often the stumbling block to accessing the loan they need to move forward. Thankfully, specialist credit lenders are committed to assisting and providing a helping hand rather than knocking you back when it comes to personal lending.
We discuss more on the benefits of working with lenders that can help with short term bad credit loans.
Car Loan Your credit history explained
Most people have a general idea of whether or not they have bad credit. To truly understand your credit position, you must first locate your credit score and review your credit file. Knowing where you stand on the credit scale and identifying which factors are helping or hindering it can give you the insight required to improve your credit position.
What is a good credit score?
Your credit score (otherwise known as your credit rating) is a number assigned to you based on your history of borrowing and repayment history. Your score is provided by one of the major credit reporting agencies in Australia. Depending on the agency, your score will range anywhere from 0 – 1,200 and is calculated based on the information reported on your credit file. The higher the score, the better your chances of borrowing money, as it indicates financial responsibility. Generally speaking, a score of 750 or higher is considered to be good. Credit scores lower than 500 are typically considered poor. When lenders run credit checks, the score will assist them in deciding whether they’re comfortable approving the application or whether they decline.
How can I access my credit report?
In Australia, you have the right to access a copy of your credit report every three months for free! The information on your credit report is what contributes to your overall rating, so it’s essential to look at what’s on your report.
Regardless of what has happened in the past, the present may call for a Personal Loan. Mainstream lenders, such as big banks and credit unions, are hesitant to make Personal Loans to applicants with poor credit. Understandably, they want assurance that the loan can be repaid, which is based on your previous financial history. If your borrowing history indicates a history of financial difficulties, big banks and credit unions will err on the side of caution and decline your loan application.
Direct lenders for bad credit
Not meeting the lending criteria at Australia’s more well-known financial institutions doesn’t need to prevent you from having a Personal Loan approved elsewhere. Direct lenders provide Personal Loans to people with bad credit.
Bad credit Personal Loans are financing options designed for people who have either no credit history or poor credit history. Bad credit lenders understand that there is more to your financial situation than what’s on your credit file. Lenders specialising in bad credit applications will look at your personal circumstances.
The eligibility criteria for a bad credit loan are far more flexible and understanding than the rigid criteria imposed by mainstream lenders.
Frequently asked questions about bad credit lenders
Searching for the best lender and Personal Loan for you can be time-consuming. We answer some of the most frequently asked questions about bad credit lenders to save you time.
Will I pay higher interest rates through bad credit lenders?
Lenders typically set interest rates and adjust them based on the strength of your loan application. A secured Personal Loan typically has a lower interest rate than an unsecured loan because there is collateral that can be accessed if you default and are unable to repay the loan. On the other hand, unsecured loans are slightly riskier for lenders, due to the lack of collateral which is why they often come with higher interest rates.
While you may pay a higher interest rate on a Personal Loan than someone with a good credit history, the difference is that bad credit lenders will look at your loan application as a whole, focusing on your ability to repay the loan rather than ticking a box!
Did you know?
Credit card interest rates are frequently among the highest in the credit market. Even if an unsecured Personal Loan has a high interest rate, it may have a lower interest rate than a credit card and, if so, may save money in the long run by consolidation credit card debt with a Personal Loan.
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