Credit cards if you have bad credit
No credit card in Australia guarantees approval, and anyone promising it is best avoided. What you can do is understand what lenders see, fix what is fixable, and avoid making your record worse.
Check your credit report first
You can get a free copy of your credit report from each of the credit reporting bodies, Equifax, Experian and illion, every three months. CreditSmart explains how. Look for:
- defaults, and whether they are listed as paid
- late payments in your repayment history
- credit enquiries from applications you made
- anything you don’t recognise, which you can ask to have corrected for free
Why applying repeatedly backfires
Every credit application is recorded as an enquiry. Several enquiries in a short time can look like a red flag to lenders and reduce your chance of approval. St.George makes the same point to its own applicants. If you are declined, wait and work on your record before trying again.
Rebuilding your record
- Keep up with existing credit repayments and bills. Recent repayment history carries a lot of weight.
- Pay off defaults. They stay on your report for a period, but a paid default looks better than an unpaid one.
- Reduce limits on cards you already hold. Lenders look at your total available credit, not just what you owe.
- Give it time. Negative listings drop off your report after a set period.
Be wary of paid “credit repair”
Companies that charge to “clean” your credit file can’t remove accurate listings. Correcting a genuine error is free: contact the credit provider or the credit reporting body directly.
Alternatives when you need money
- No Interest Loans Scheme (NILS): loans for essentials with no interest or fees, for people on low incomes.
- Hardship arrangements: if you can’t meet existing repayments, ask your lender’s hardship team about changing your repayment arrangements.
- Free financial counselling: the National Debt Helpline, 1800 007 007.
High-cost short-term loans and “rent to buy” arrangements can make a difficult situation worse. Talk to a financial counsellor before taking one.