What exactly is a bad credit score?

If you have bad credit, you may have to apply with multiple banks only to be rejected. Since the pandemic, banks have been tightening their lending rules. However, many online lenders do offer a range of bad credit loans online for small business owners. “Can you get a loan with extremely bad credit, “you ask? Let’s find out.

What exactly is a bad credit score?

Credit scores in Australia range from 300 to a maximum of 850. If your score is 550 or lower, you are considered to have bad credit. On the other hand, a score of 650 or higher means you have a good credit score. Your score is impacted by factors like multiple credit inquires, and bad repayments among others.

Can you get a loan with extremely bad credit?

If you have defaulted on repayments in the past, you might still get a bad credit loan. In case of bankruptcy, however, you may have to wait until existing obligations are cleared. While approval is by no means guaranteed, you can greatly increase the odds of approval by following the recommendations below:

Review your credit report:

The first step is to make a list of any outstanding debts that might appear on your credit report. Over time, discrepancies may pop up and continue accruing interest unless rectified, ultimately affecting your credit score. For example, any unauthorised credit cards or loans appearing on your credit report can be reported as fraud which can improve your credit score.

Negotiate with your existing creditors:

If you are finding it hard to catch up with overdue payments, it’s important that you negotiate a repayment plan with your lenders. This will prevent additional interest and surcharges from piling on. 

Prioritise repayments strategically:

Pay down the debts with the highest interest rates first- for example, credit cards or personal loans. If you get a weekly pay cheque, you can stagger your payments across different dates rather than try to repay everything at the end of the month.

How easy is it to get a loan with bad credit?

With online lenders, your chances of getting much-needed funding are much better than before. While bad credit loans don’t come with guaranteed approval, certain lenders will lower your interest rate (refinancing option) as your credit score improves over time. It is important that you do your research to get the best possible deal, before you apply. This can help avoid multiple credit enquiries in a short span of time. 

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