Can I get a personal loan if I have bad credit?

close up on a man's hand as he uses a calculator to go over his finances as he prepares to apply for a personal loan

While having bad credit will never work in your favour, it does not necessarily mean you are ineligible for a personal loan.

Let’s get started with a few key questions:

What is a credit history?

Essentially, your credit history (rating or score) is a number between 0 and 1000 (or sometimes 1200, depending on the credit report).

That number is a score based on the personal and financial information within your credit report, including if you have ever declared bankruptcy, have ever been denied a credit card or loan, or whether you pay your bills on time.

When applying for a loan or credit card, the lender will check your credit score to determine how reliable a borrower you are based on your rating. So, having bad credit can be a red flag for lenders.

What kind of personal loan can I qualify for if I have bad credit?

It may be more challenging to qualify for a personal loan if you have a poor credit history than an applicant with stellar credit.

You also might find yourself offered a significantly higher interest rate and fees than someone with a good credit score would.

It is also important to keep in mind that lenders may require more intense application processes and financial verification procedures for applicants with poor credit. This is to ensure that you can handle the loan repayments. Additionally, lenders may ask for additional security on the loan.

What about payday loans?

There are some types of online loans that may not require credit checks and offer instant money transfers, known as payday loans. Mozo does not endorse these types of loans as they are potentially very risky due to their high interest rates.

Find out more about all types of loans available to apply online at the Mozo online loan hub.

How can I get a good personal loan with bad credit?

As it can be extremely difficult to be approved for a good interest rate personal loan with bad credit, the best approach is often to try and improve your credit score.

How can I fix my bad credit score?

Improving your credit score is not an overnight process, but it is extremely worthwhile.

The first step is to get a copy of your credit report from one of the main credit reporting bodies in Australia, such as Equifax or Experian. Then, check your report for errors or possible identity fraud, as you do not want to be blindsided by inaccurate information during a credit check.

Once you have combed through your report, it’s time to get your finances in order. You will need to pay off any outstanding debts. Any bills that have gone into default will be listed on your report for five years, but will be marked as paid when you pay them. So, although defaulted bills are still a mark against you, they’re better paid late than not at all. You also should try to set up direct debit payment systems to prevent any further late payments.

Finally, limit your credit applications. Each time you do, a lender does a ‘hard enquiry’, which goes onto your credit report. Too many hard enquiries will negatively affect your credit rating.

To learn more about improving your credit history before applying for a personal loan, check out Mozo’s step-by-step guide to improving your credit.

Before taking out a personal loan, it is critical to do your research and learn what is going to work best for your situation. Start by checking out Mozo’s personal loan hub for more information.

Compare top personal loans below for an idea of the types of loans that would suit you:

Compare personal loans - rates updated daily

Search promoted personal loans below or do a full Mozo database search. Advertiser disclosure.
  • Hot DealRates from 5.95% p.a. (comparison 5.95% p.a.*) for excellent credit customers
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    Mozo Experts Choice 2021
    No Fee Unsecured Personal Loan

    Fixed

    interest rate
    comparison rate
    Monthly repayment
    5.95% p.a.to 17.95% p.a.
    5.95% p.a.to 17.95% p.a.based on $30,000
    over 5 years

    Borrow up to $50,000 with no fees, now and forever. Minimum requirement to earn $22,100 p.a. and have good to excellent credit. Winner of Mozo’s Experts Choice Unsecured Personal Loan 2021 award.

    Go to site
    Details
  • Hot DealA special low rate starting from 5.45% (6.07% comparison rate)
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    Mozo Experts Choice 2021
    Low Rate Personal Loan (Fixed, Unsecured)

    Excellent Credit

    interest rate
    comparison rate
    Monthly repayment
    5.45% p.a.to 8.48% p.a.
    6.07% p.a.to 8.84% p.a.based on $30,000
    over 5 years

    OurMoneyMarket offer competitive low rates on loans up to $75,000, plus free extra repayments and fee-free redraw facility. Winner of Mozo's Experts Choice Unsecured Personal Loan 2021 award.

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    Details
  • placeholder
    Mozo Experts Choice 2021
    Personal Loan

    Unsecured, Fixed

    interest rate
    comparison rate
    Monthly repayment
    5.45% p.a.to 19.99% p.a.
    5.45% p.a.to 19.99% p.a.based on $30,000
    over 5 years

    Excellent credit score needed to obtain this rate. Enjoy no-fuss personal loans of up to $30,000 with Alex Bank. No hidden early repayment penalties. Terms from 6 months to 5 years. Convenient and fast 100% online approval. Must be over 18 to be eligible. Winner of Mozo's Experts Choice Best New Loan Product award 2021^.

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    Details
  • placeholder
    Unsecured Personal Loan

    Fixed

    interest rate
    comparison rate
    Monthly repayment
    5.35% p.a.to 19.09% p.a.
    6.14% p.a.to 19.99% p.a.based on $30,000
    over 5 years

    Fast, easy and 100% online, this is a low cost loan with no ongoing fees or extra repayment penalties. It's perfect for savvy borrowers with great credit. If you’re over 18 and earn above $30,000, you'll likely qualify.

    Go to site
    Details
  • placeholder
    Personal Loan

    Unsecured, Fixed, Excellent Credit

    interest rate
    comparison rate
    Monthly repayment
    6.39% p.a.to 7.49% p.a.
    6.39% p.a.to 8.19% p.a.based on $30,000
    over 5 years

    With low rates for borrowers with excellent credit, a quick 1 minute rate estimate and simple online application, there’s a lot to love about this loan! You’ll not only benefit from no exit fees, there are also no early repayment fees. To qualify, simply earn above $25,000 and you’ll be on the way to start spending.

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    Details

* WARNING: The Comparison Rate combines the lender's interest rate, fees and charges into a single rate to show the true cost of a personal loan. The comparison rates displayed are calculated based on a loan of $30,000 for a term of 5 years or a loan of $10,000 for a term of 3 years as indicated, based on monthly principal and interest repayments, on a secured basis for secured loans and an unsecured basis for unsecured loans. This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.

^See information about the Mozo Experts Choice Personal Loan Awards

Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.

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