Can I Get a Credit Card with Bad Credit | Compare Money (2023)

Having poor credit history may make it tricky to get a credit card. We’ve explained some of the options and actions that may help to improve your credit score.

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Credit cards and a poor credit history don’t usually go together. So, if you’re considering applying for a credit card, there may be things you can do to try and get your application and credit score in better shape which may improve the chances of you being approved for a new credit card.

What is bad credit in Australia?

‘Bad credit’ generally means you have a poor record of meeting your financial obligations, which can have a negative impact on your credit score. This is based on your comprehensive credit report, which agencies compile based on information about you that your lenders send them.

The main credit reporting bodies in Australia are Experian, Illion, and Equifax, and they each have slightly different information about your financial history. For example, your lender may assign a debt collection company to your case if you’ve defaulted on your credit card or loan payments. Your lender will usually share this news with the credit reporting agencies it works with, which will be listed on your credit record.

The agencies will generally classify your score as excellent, very good, good, average, or below average.

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Are credit cards possible with bad credit in Australia?

Yes, it’s possible, but it depends on your circumstances and the would-be lenders’ eligibility criteria.

According to the Australian Securities & Investments Commission, credit card issuers should not offer a card if the consumer can’t pay it back. Lenders must do their due diligence to assess if you can reasonably afford to pay the debt with interest. They’re also not permitted to provide an unsolicited offer to boost your credit on new or existing cards.

Take a long look at your finances and decide whether you can afford to make repayments on any credit cards you may want to get. If you know you can afford it, then do your research to find credit card issuers who may be likely accept your application. You may even decide to narrow your search to:

  • Credit cards for those on a low income, such as those with a low credit limit
  • Low-interest rate cards
  • Low annual fee cards
  • A shared credit card, for example with a partner, if it suits both of your circumstances.

When you’ve refined your list, you can contact lenders online, by phone, or over the counter at a branch to conduct further research about their eligibility criteria and if it’s worth applying.

What credit score do I need to qualify for a credit card in Australia?

Each credit card issuer sets its individual application criteria and will consider both your credit history and current financial circumstances before approving. However, depending on your overall circumstances, you’re likely to have a better chance of approval if you have a good credit rating – 625 to 699 from credit reporting agency Experian, or 670 to 739 from Equifax.

How can you improve your credit score in Australia?

You need to make sure you manage your finances responsibly to try and boost your credit score. That means paying off bills, loans, and credit cards on time, reducing your debt, avoid making multiple credit card applications, or moving your home and job too frequently.

It is usually recommended to tackle whichever debt has the highest interest rate first, however this can depend on your own personal situation. To help you prioritise and plan, consider using MoneySmart’s personal loan repayment calculator and look into if free financial counselling is available to you.

If there are any mistakes on your credit report, ask the lender connected with the error to correct it.

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How to apply for a credit card with a low credit rating

If you’re keen on a credit card, it may be worth considering basic credit cards which offer a low credit limit and smaller interest rates. Another option is to wait until your credit score has improved to a more desirable level for lenders when they are qualifying you for approval.

Other types of loans, such as small amount payday loans are generally very expensive, high risk and are usually not recommended in most circumstances. Another option could be to check your eligibility for a no interest loan which could be used to help, instead of going down the path of a credit card or payday loan.

If you’re considering a loan or credit card because you’re struggling to keep your head above water, it’s recommended to seek assistance from a free financial counselling service before committing to anything.

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What can cause bad credit scores?

Your financial behaviour drives your credit score. If you’ve missed repayments for credit cards, home or personal loans, or utility bills, for example, they may be recorded, as could going over your credit limit.

Credit scores draw on your credit history, such as whether you’ve met repayments on your credit cards and other loans. You may also earn points for having stable employment and residence.

Your credit score is generally based on the past five years, but this can vary depending on the information type. Here’s what can contribute to your credit score and how long this information stays on your report, according to the Office of the Australian Information Commissioner:

  • Default – five years
  • Financial hardship agreement – one year (this category took effect from 1 July 2022 and will show if you’ve entered into such an arrangement)
  • Repayment history – 2 years
  • Serious credit infringement – 7 years
  • Bankruptcy – either five years starting on the day of bankruptcy or two years starting when you were no longer bankrupt
  • Court judgment – five years
  • Credit enquiry – five years
  • Current consumer credit obligations – 2 years (from the end of the consumer credit), and
  • Debt agreement – five years from when the deal was made or two years from when it was terminated, ended as part of your bankruptcy, or an order made rendering the agreement void.

How to find out what your credit score is in Australia?

To access your credit score, get in touch with one of the credit reporting agencies. The official MoneySmart website can help with showing you how to go about it.

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What is a good credit score?

Depending on which credit reporting agency has scored you, to achieve a good credit rating, for example, you’d need 625-699 (for Experian) or 670 to 739 (for Equifax).

Can I get a credit card without a credit check?

All credit card issuers will do a credit check on you before they offer you a card. It’s part of their due diligence to manage their risks.

Getting a credit card with a bad credit rating can be stressful and if you’re already struggling with debt it’s generally not recommended to add to it with further credit. Looking into how you can manage your debt or where you can get help might be a better place to start.

However, if you’re looking for a new credit card, comparing a range of credit cards and their terms can be helpful. You can get started by using the Compare Money credit card comparison table here.


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