Having poor credit is never good. While it doesn’t immediately disqualify you from applying for personal loans, you may find it harder than if you had good credit. You may also have to pay a far higher interest rate and fees for a personal loan with a low credit score.
Several lenders will consider your application for a personal loan without letting your low credit score rule their judgment.
The best way to ensure you’re approved is to research and avoid lenders who will run a hard credit check on you. This will make your credit score worse.
One thing to remember is that you should nurture your credit score. Bad credit can impact many things. Let’s take a look into whether you can get a personal loan with a low credit score.
What is a low credit score?
A low credit score is often known as bad credit. The credit reporting agencies within Australia compile your entire credit history into a report. The report is what your lenders look at when deciding whether or not to approve you for a personal loan with a low credit score. The report includes a credit score, which is a number based on things such as:
- Your credit history
- Your age
- Where you live
The higher your score, the better your chance of being approved for finance and receiving favourable fees, rates and terms. While each individual agency has its different scoring system, it generally goes like this:
- Over 750- An excellent credit score
- Between 700-749– A good credit score
- Between 580 and 669– A fair credit score
- Below 580– A bad credit score
Banks and traditional lenders are usually wary of people with bad credit scores. That is because they are more likely to fall behind on repayments.
How do I get a low credit score?
Negative events in your credit history can be very bad for your credit score. Negative events can be considered as:
- Having too many credit checks over a small window of time (credit enquiries). This is caused by applying for multiple loans.
- Missing or defaulting on loan payments (including credit cards)
- Going bankrupt
- Having credit applications denied
You can still get a personal loan with a low credit score, but it will be much more challenging.
How do I improve my credit score?
Improving your credit score certainly isn’t easy. However, there are many ways you can fix it. Positive credit events will help you. Some positive credit events are:
- Keeping your debts small and manageable
- Keeping up with your repayments
- Fully repaying your loans
- Making more than the minimum repayments on your credit cards.
Obviously, this isn’t a quick fix, but it is a fix. Fixing your credit is important, as you can’t always get a personal loan with a low credit score.
If you are looking for a quicker fix, credit repair is a fantastic option. Credit repair experts can negotiate to get rid of defaults, credit enquiries, court judgments and black marks from your file, but it does cost money. We recommend Clean Credit:
- They operate Australia-wide
- They have a no removal, no removal fee policy (in the unlikely event that they fail to remove a negative listing from your file, you receive a refund of your removal fee)
- Their success rate is over 90%
- Negative listings could be removed within as little as 30 days
- They are rated 4.8* on Trustpilot
- They are one of the longest-running credit repair companies.
Can I get a personal loan with a low credit score?
Getting a personal loan with a low credit score is far more difficult than if you have good or excellent credit. However, it is still possible.
Some lenders specialise in providing personal loans for people with bad credit histories, but these may have higher interest rates and fees. In addition, you may need to secure your loan against a personal asset, such as a car or your mortgage, to increase your chances.
The good news is that applications with the Australian Lending Centre have no impact on your credit score and do not require security. Therefore, you can apply for finance risk-free.
Things to keep in mind when getting a personal loan with a low credit score
There are some important things to know when you get a personal loan with a low credit score. Here are some things you need to consider:
- Each lender will have its own policy. However, you will find it hard to get approved for a loan of more than $50,000 if you have a bad credit score.
- You are likely to face higher interest rates than usual. Make sure you do your research to find the best rate available.
- While lenders can be sympathetic, they have a process to follow.
- As mentioned above, you will most likely have to secure your loan against a personal asset to increase your chances of approval and keep costs down.
- You may need to provide more documentation than you would for a normal loan to prove that you can afford your repayments since you will be classed as a ‘high-risk borrower’.
The bottom line of getting a personal loan with a low credit score
Getting approved for a personal loan with a low credit score can be hard. However, the Australian Lending Centre makes it as easy as possible. We provide a wide range of services low credit score loans Australia-wide to ensure that everyone has access to finance when they need it.
