Can I get finance if I have a bad credit score?

With a recent report stating that almost 1 in 4 people in Australia having some form of an adverse listing on their credit report, it’s not surprising that we are commonly asked if someone can get approved for finance with a bad credit history. So, if this is something you have wondered lately, you are not alone.

Well, I am delighted to be able to let you know that, if for whatever reason you have a bad credit score, it’s not the end of the road when it comes to getting approved for finance. 

In this article I am going to shed some light on what options you have for obtaining finance, even if the information in your credit report is impacting your credit score.  

Can I get a home loan with bad credit in Australia? The simple answer is Yes. However, it’s important to know that although you may be able to get approved for finance, there are several things that you need to understand about your finance options when you have bad credit.

For starters, while it is certainly possible, it’s a lot harder to get approved for finance when you have a bad credit score. Below is a list of some of the other impacts of obtaining finance with a bad credit score.

  • There are less lenders willing to work with you than if you have a good credit score
  • Expect to pay a higher interest rate than you would if you had a good credit score.
  • Expect to pay higher fees than you would if you had a good credit score.
  • Expect to pay Lenders Mortgage Insurance.

However, there are situations and lenders where you may struggle to get approved for finance.

When are you less likely to be approved finance?

In Australia, a credit provider is governed by strict rules and regulations. One of these is the Responsible Lending Regulatory Guide. The Responsible Lending Guide outlines the obligations a credit provider, such as a bank, must follow before they approve your finance. These responsible lending obligations are designed to ensure that lenders do not suggest or encourage you to enter into unsuitable credit arrangements that you may be incapable of paying back based on your financial situation.

When you apply for finance, you sign that you have read and understood the Terms and Conditions. But let’s be honest no one really reads or pays much attention to the small print before signing on the dotted line.  However, one thing that many people don’t realise is that it’s common for one of those terms and conditions be that the credit provider has permission to do a credit check on you before approving your finance.

Your credit report provides a summary of your recent relationships with other creditors. It acts as a kind of report card and allows a pending credit provider to get an understanding of your history of managing and repaying debt. The information in your credit report is used to calculate your credit score (for more information on your credit score check out this blog – insert link to previous blog).

Often a pending credit provider will initially do a quick check of your credit score. If your credit score is below average this indicates there is a problem with your credit history. The credit provider will then check your actual credit report.

Adverse information on your credit report, such as a default or numerous credit enquiries indicates that you are likely to struggle to repay debt and it’s at this point that major banks and lenders will more than likely decline your credit application. This may be because of their tight lending criteria or their own risk profile and internal policies or simply an automatic decline based solely on credit score.

However, all is not lost, as recently we have seen a rise in lenders offering products designed for people with poor credit (often called non-conforming specialist lenders).

This week FBC’s own James Kaiwai interviewed Steven Emms from Speaking Finance, who explained non-conforming finance and how it works.  Learn more here [ CK ask fil to edit the video around the non conforming part]

Unlike many of the major banks, a non-conforming lender is more likely to carefully assess your loan application on a case-by-case basis, taking into account the specific circumstances that led to the adverse listing being made on your credit report. They will also consider how helping you obtain the new loan will put you in a better financial situation long term.

If you have a bad credit history or if your credit score is less than desirable, the other aspects of your application will be reviewed to provide more weighting for the risk assessment process of approving your application. These factors may include your current income, expenses, length and stability of employment, how much you want to borrow and how much deposit you have managed to save.

Whilst non-conforming loans are popular for home loans, they are also available in most fields of finance including vehicles, asset equipment, and commercial finance.

So yes, you can get finance with a bad credit score, but there is a cost.

Please remember the life of a home loan spans 25 or 30 years, therefore even a slightly higher interest rate can add up making a big difference on the overall cost.

Below is an example of how big the difference in interest rates can be in terms of what you need to repay over the lifetime of your loan. This does not include any additional fees or the costs of Lenders Mortgage Insurance.

As well, if you’ve found it difficult to manage smaller loans in the past, taking out a big loan may be biting off more than you can chew and if you fall behind in your repayments or even default on the loan, your credit score will only get worse. 

And in the event that your loan application is rejected, this can also cause several problems. First is that you may forfeit your application fee and your credit score will also be negatively impacted.

Bad credit loans are usually used as a short- to medium-term fix, rather than a long-term solution. Usually, a borrower accepts a higher interest bad credit loan with the intent of refinancing to a standard loan with a major lender when their credit history has been cleared of adverse information and their credit score has improved.

So, in summary, getting a loan with a bad credit brings with it a few more challenges that require consideration, but it’s certainly not impossible. If you have a bad credit history, it’s important to carefully consider whether applying for a loan is the most prudent thing for you to do.

Due to the higher costs you are exposed to with these types of loans, it’s even more important to carefully research fees, interest rates, contract terms and risks before you apply for one. 

The team at Fix Bad Credit can help by reviewing your credit report for free. We can then advise if we can help you by potentially removing the negative information from your credit report – giving you access to a standard loan, which you can tell by the example above may be the best investment you can make for your financial freedom.

Alternatively, we can assist with your due diligence providing you with options that suit your specific circumstances and getting you in touch with our non-conforming credit specialists like Steven and the team at Speaking Finance.

Get in touch, it won’t cost you a cent.



B M Peachey

B M Peachey, has over 15 years of experience investing in property and the stock market, in both New Zealand and Australia. She has a post-graduate degree, with qualifications in Finance and Mortgage Broking and in Accounting and Bookkeeping. She is passionate about ensuring people have access to credible, reliable, and easy to understand information to help them get in control of the life they REALLY want to live.

Google Rating
Based on 18 reviews

Get Your Free Credit and Debt Assessment Now

To help you take control of debt and achieve financial freedom

    Financial Improvements

    Assisting Australians make

    of improvements to their lives in 2022 to date.


    To help you take control of debt and achieve financial freedom

    How to Remove a Paid Judgement From a Credit Report

    Your credit report (also known as credit file), and the related credit score (or rating), is a record of your history with managing credit and paying your bills on time. Banks and other potential credit providers use this information to determine how creditworthy you...

    Are Bankruptcy Filings Public Records?

    Filing for bankruptcy in Australia is a serious decision, and it is important that you are aware of the implications of declaring bankruptcy before you make it. Bankruptcy can have a significant impact on your financial situation for several years, however it could be...

    What is a Good Credit Score in Australia?

    A credit score is a number that determines your creditworthiness, or the likelihood that you will pay back any money that you borrow. It helps lenders to make informed lending decisions based on the risk of lending you more money. The higher your score, the more...

    The Effect of Afterpay and Zip Pay on Your Credit Score

    Buy now, pay later (BNPL) giants Afterpay and Zip Co (which offer Zip Pay) report almost five million customers across Australia and New Zealand combined. So, it’s likely that you’re one of them. But do you know what are the effects of Afterpay and Zip Pay  on your...

    What is a Mortgagee in Possession – And How Do I Handle It?

    If you have taken out a mortgage, you must know the repercussions of not making your due mortgage payments. A mortgagee in possession is one of the many unfavorable situations that you could face if you default on your mortgage payments. . In this article, we will...

    What Happens To HECS-HELP Debt Upon Your Death

    What Happens To HECS-HELP Debt Upon Your Death? A HECS-HELP loan (which you may also know as student debt) has eased the financial burden of attending university for thousands of Australians. In fact, according to the parliamentary library, more than 2.9 million...

    What is Buy Now Pay Later?

    Whether we like them or not, Buy Now Pay Later (BNPL) platforms have changed the way many Aussies pay for things, but do you even know what they are?In this blog I’m going to cover: How you can legally take something from a shop without paying for it. BNPL platforms -...

    The pros and cons of declaring bankruptcy in Australia

    Filing for bankruptcy is a serious decision, and it is important that you are aware of the pros and cons of declaring bankruptcy before you make it. Understandably, no one wants to consider bankruptcy, as it can have a significant impact on your financial situation...

    If you’re planning to buy property you need to read this first

    LOOKING FOR AN ESCAPE PLAN? 7 STEPS FOR MAKING IT WORK  Are you one of the millions of people in lock down in NSW or Victoria, feeling trapped in a small apartment with rowdy kids, or with housemates that are driving you crazy? Fed up with the uncertainty? Well,...

    Bankruptcy Due to Lockdown

    There’s no denying that the extended COVID-19 lockdowns being imposed, initially in Melbourne and Sydney, and now more regionally in NSW, thanks to the emergence of the highly infectious delta variant, are starting to bite. While this measure is integral for our...

    I Need Help Managing Debt

    I Need Help Fixing my Credit Score

    I Need Help With Bankruptcy

    Disclaimer: The information in this article is general in nature as it has been prepared without taking account of your specific objectives, financial situation or needs. Therefore, you should consider whether the information is appropriate to your circumstance before acting on it, and where appropriate, seek professional advice from a finance professional such as an adviser.