You can get a loan with past credit problems in some circumstances, but it will be dependent on the rest of your financial profile being in good shape.
Lenders consider a number of factors outside of just your credit report.
This benefits those who have hit trouble in the past but have since built a sound track record of managing their household budget.
In this article, we’ll discuss how to improve your loan application even if you have had past defaults.
What is Bad Credit
Bad credit refers to the risk associated with lending someone money. Higher risk means a greater likelihood that a loan will not be repaid.
As a result, the cost of a bad credit cash loan is generally higher, than a regular personal loan.
The maximum loan amount will also be capped at a lower amount.
There are a number of indicators that a lender will consider to assess when you have bad credit or are considered higher risk.
Low Credit Score
Your credit score is a reflection of past behaviour associated with your financial history.
This is not limited to borrowing money through products like personal loans, credit cards, or home loans.
It can also be affected by service-related products such as a mobile phone contract or a utility payment that was overdue for an extended period.
The most common causes of damage to a credit score can include:
- Missed or late payments on everyday bills.
- Defaults or accounts sent to debt collectors.
- Multiple credit enquiries in a short timeframe.
- Past bankruptcies or Part IX debt agreements.
Your credit score is one of the first eligibility requirements that most lenders consider.
Thin Credit History
It takes time to build a strong credit score.
As a result, those who are young and have not had a loan before, or those who are new to the country, can also be categorised as higher risk.
This may sound unfair as they have not missed any loan repayments in the past to tarnish their record.
However, remember that a credit score is a predictor of future risk.
If you have no history to measure, then the uncertainty equals higher risk for the lender.
Poor Financial Behaviours
The final reason that someone could be assessed as a high credit risk is if they are demonstrating risky financial habits.
As part of your cash loan application, Gusto Cash will always review your bank statements as part of a responsible lending assessment.
An example of a high risk transaction in your bank statement would be frequent payment reversals.
Not only does this indicate that you are behind on other payments, but you are also wasting money on bank fees that will eat into your disposable income.
Positive Risk Factors
If we put your credit score aside, the other significant factor is whether you can comfortably afford the repayments on the loan.
To determine this, the following items are assessed:
- Stability and amount of income coming in.
- Consistency of living expenses going out.
- What type of other debt you have.
The purpose is to assess your ability to repay based on your current situation, including any potential credit you already have access to.
Think credit cards, afterpay, or any other consumer debt where you have an unutilised balance.
Poor Credit Loan Categories
Borrowers often group all bad credit loans together whereas Australian law divides these products into three regulated categories.
Each with distinct legal protections and fee structures:
- Small Amount Credit Contracts (SACC): Up to $2,000; 16 days to 12 months.
- Medium Amount Credit Contracts (MACC): $2,001 to $5,000; 16 days to 24 months.
- Larger Personal Loans (Over $5,000): These feature a broader pricing range and demand a stronger credit history.
There are also a range of credit card (or similar) products that could be available to someone with bad credit.
Note, Gusto Cash only offers MACC loans. Click below to kickstart your application.
Cash Loan Approval Checklist
If you need urgent cash then the fastest way to secure a rapid approval is to be fully transparent and complete in the application.
To secure rapid approval, provide:
- Valid ID documents.
- Accurate financial details.
- Bank statements through the online portal.
- Stable income and employment tenure.
Our fully online application can be completed in just a few minutes and all documents submitted digitally to enable fast approvals.
The Cost of Bad Credit Loans
If you have a low credit score you will pay more to access credit.
However, the Australian market is heavily regulated and you will not find predatory payday loans in the market as you may have in decades gone by.
In fact, payday loans were outlawed over ten years ago with strict cost caps introduced on cash loan products.
Most SACC and MACC lenders charge the same interest rate in line with the legislated cap (which is 48% p.a.)
While this sounds very high, for shorter loan terms the interest incurred in dollar terms is actually quite low in comparison to a longer term loan with a lower rate.
Fee Red Flags
Where some cash lenders may sting you is with late fees, penalty interest, or early repayment penalties.
So if you are engaging in SACC or MACC borrowing you should always compare the fee structure and not just the interest rate.
Gusto Cash does not charge any early repayment fees so you can meet your short term cash needs without mandatory costs hanging over your head when things improve.
Learn more on our costs page.
Frequently Asked Questions
Can I get a cash loan if I have a bad credit history?
Yes, you can still get a cash loan with past credit problems in some circumstances. Some lenders will consider a number of factors outside of just your credit score.
What factors do lenders look at to approve my loan besides my credit score?
Lenders generally want to see if you can comfortably afford the loan repayments. They will assess your income, living expenses, any high risk bank transactions (like gambling or regular payment reversals), and what other types of debt you currently have.
What is the fastest way to get approved for a cash loan?
To secure rapid approval, you need to be transparent and provide a complete application. This includes providing valid ID documents, accurate financial details, your digital bank statements, and proof of stable income and employment.
How to Get a Bad Credit Cash Loan?
You can get a car loan with bad credit if you can demonstrate other positive financial behaviours that would suggest that you are a better credit risk than your credit file may indicate.
Credit defaults can stay on your report for five years, but you can demonstrate improving behaviours in just a few weeks.
So if you need cash fast for an unexpected bill then start your application today by clicking below.
