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Can I Get A Personal Loan With Bad Credit?

Updated: Jun 13

When you apply for any kind of credit product, a lender will consider many things, including your credit score. Your credit score is a number between 0 and 1,200 and represents your ‘creditworthiness’. It’s a small insight into how well you manage money and how responsible you are with debt — the higher your number, the better your score.

Right now across Australia, many borrowers with poor credit scores can find it challenging to be approved for credit products like personal loans. And if you’ve recently checked your credit score and noticed it is below average, you may now be asking yourself, ‘can I get a small personal loan with bad credit?’

This blog will answer that question and explain your options for taking out a personal loan with bad credit.

What makes a poor credit score in Australia?

Your credit score tells a bank or financial institution how reliable you are as a borrower, and if your score is on the lower end, you may find it difficult to secure financing. In Australia, three major credit bureaus — Experian, illion and Equifax — have their own credit score measurements.

Credit scores in Australia are typically broken up into five brackets: Excellent (833-1,200), Very Good (726-832), Good (622-725), Average (510-621) and Below Average (0-509).

Poor credit scores can occur for many reasons. In some cases, a person may have a lower-than-average credit score simply because they haven’t much experience managing credit! Some of the most common contributing factors to a poor credit score are:

  • Late bill or credit repayments — If a bill is over $150 and 60 days have passed since a debt collector contacted you, it will be listed as a credit default and will stay on your file for as many as five years.

  • Maxing out or having an excessive credit limit — Maxing out your credit cards or taking on more credit than you can afford is a no-no in the eyes of a lender and negatively impacts your credit score.

  • Too many rejected credit applications — If you have applied for credit in the past and have been rejected by a lender, the decision is recorded on your credit file and can remain there for several years.

  • Identity theft — This refers to someone using your name to take out several credit cards or loans. According to recent figures from the Australian Bureau of Statistics, approximately 6.9% of Australians 15 years and over experienced card fraud between 2020-2021.

  • Court judgements — If you’ve ever had to appear in court for financial reasons, the judgement will remain on your credit file for up to five years. The judgement creditor is also given at least 12 years to take action and recover your debt.

While you can seek help from a credit repair organisation to remove these black marks from your credit file, the process can take weeks or months, which is not ideal if you need access to quick funding — leaving you to wonder, ‘can I get a personal loan with bad credit?’

Personal loans for people with bad credit — what are my options?

Lenders typically view Australians with poor credit scores as ‘risky’ borrowers. Many financial institutions deem borrowers with below-average scores as individuals with poor money management skills and unreliable when making repayments on time — though that’s not to say getting a personal loan with bad credit is impossible.

Once you start browsing your options, you’ll find that personal loans for people with bad credit are more than often secured. This means you will need to offer collateral to the lender if approved. It’s also worth noting that depending on the lender, you may have limited borrowing capacity and be given higher interest rates.

Can I get a business loan with bad personal credit? It’s possible! Though, depending on the lender, stricter criteria may apply.

The Salt & Lime — the debt consolidation loan with a difference

Our loan empowers borrowers to improve their financial circumstances. As you pay down your loan and complete ten quarterly financial education modules, we provide interest rate discounts, helping you save on your repayments.

Our modules are designed to boost your financial knowledge, so you can take control of your financial future long after your loan is paid off. They cover everything from understanding your loan’s details to saving strategies and overall financial management.

Take the first step toward financial freedom with Salt & Lime

Don’t let a poor credit score keep you from getting what you want out of life. Salt & Lime are responsible lenders committed to helping borrowers reach their financial goals and improve their financial futures. Our bad credit debt consolidation loan can help you rebuild your credit score and restore your financial confidence.

If you would like to learn more about how to apply for our bad credit debt consolidation or want more information about our loans, contact us today.


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