What is a bad credit loan?
In Australia, a bad credit loan is a personal loan for people who have a bad credit history.
A bad credit history is sometimes referred to as a poor credit rating, and typically means you won't be able to obtain a loan from a traditional lender, like a bank.
Bad credit loans are most commonly provided by specialist lenders like ourselves, who are dedicated to helping customers in the sub prime market.
How do you get a bad credit history?
You will experience a bad credit history when one or more of the following financial events occur to you.
These are listed on your credit report by the lender or service provider you have defaulted against or applied to:
- A debt or loan repayment that is overdue by 60 days or more, and the overdue amount is at least $150
- Poor repayment history such as missing or being late with due payments
- Declined credit applications
- Part 9 Debt Agreement - a legally binding agreement between a debtor and their creditor, where the creditors agree to accept an amount of money that you can afford to pay
How do know if I have a bad credit history?
To confirm whether you currently have a bad credit history or not, you will need to review your credit report and see what is currently listed on it.
This sounds simple, but in Australia there are four major credit reporting agencies who manage credit reports, and only two will provide it to you if you request it.
Each one may hold different information, depending on whether the lender or service provider uses them as their credit reporting agency.
The current credit reporting agencies in Australia are:
- Equifax (Previously known as Veda Advantage.) They can provide you with your credit report if you request it.
- Dun and Bradstreet. They will only provide your credit score to the lender/service provider.
- Experian. They can provide you with your credit report if you request it.
- Tasmanian Collection Service. They only provide your score to the lender/service provider. (Only for Tasmanian residents.)
It's important to note that a bad credit history does not last forever. Generally, most bad credit listing will last for 5 years, after which, if you've not had any additional negative listings, your credit report will revert back to clear.
How much can I borrow if I have bad credit?
Fair Go Finance lends between $500 and $10,000 for bad credit loans. Our loan terms range from three to thirty six months.
As a responsible lender, we will ensure that the repayment terms are suitable for each applicant’s financial situation.
Why would I take out a bad credit loan with Fair Go Finance?
There are various reasons why people choose to take out a bad credit loan, such as consolidating credit card debts, buying a car, paying a rental bond, getting help with medical expenses or to help with unexpected bills.
How can a bad credit loan help?
One of our customers, Glenn, found himself homeless, jobless, and with a Part 9 Debt Agreement at the age of 40. He and his wife Michelle moved in with Michelle’s parents to save money, and Glenn got a job on the railways.
They paid off the debt agreement and, after careful saving and budgeting, were in a position to buy their first home. They secured a home loan through a specialist lender and things were looking up. It was then Glenn discovered he couldn’t access the first homebuyer’s grant upfront to pay some of the fees as he’d planned.
They applied for a personal loan but it was declined due to his lack of a credit history. Settlement was fast approaching and Glenn didn’t know what to do. One day he had some down time at work so he decided to give it one last go and Google his options again.
Glenn came across Fair Go Finance and applied for a personal loan using his iPad while sitting on a train engine in the middle of nowhere, and hoping his internet coverage would hold out! Thankfully it did and the $3,500 loan was approved.
Glenn and Michelle have since paid off the bad credit loan and have celebrated over one year living in their new home. They’re now able to renegotiate their mortgage. Glenn said, “We wouldn’t be here if Fair Go Finance hadn’t given us a chance and approved the loan. They were a breath of fresh air.”
Can a bad credit loan help my credit rating?
Yes, it can, as long as you repay your loan as per the loan terms. For example, if you take out a loan with us at Fair Go Finance, and make your payments on time, this will show you have good repayment conduct.
Good repayment conduct proves you are responsible and reliable, and this will help you improve your credit rating.
If you have bad credit, please feel free to contact us to discuss your credit report. We are very happy to discuss your current situation and whether you are eligible now for a bad credit loan with us.