What Credit Cards Can You Apply For When You Have Bad Credit?
Implications of a Poor Credit Score
Have you been wondering about the best credit cards for bad credit in Australia? Remember, a poor credit score means you’ll likely be denied credit card approval in Australia. Issuers use your credit report and history to determine if you should get a credit card. Your credit score, income, and employment status provide information on your credibility as a borrower. If your credit report shows that you have not been able to repay loans and credit in the past, you will get a low credit score which could have consequences on your finances.
You would probably be denied new credit cards and have to pay higher interest on your existing debt. What’s more, without access to new credit, you’ll be unable to improve your credit score, causing the problem to compound without resolution.
How Do You Improve a Poor Credit Score
So what do you do in such a situation? With the right credit card, you can rebuild your credit, thus fixing financial mistakes from the past and ensuring you are in a better financial position in the future.
The key to getting out of this situation is to apply for credit cards with low upfront fees and which require security deposits.
Unfortunately, in Australia, most banks do not offer secured credit cards unless by personal negotiation with your local bank. By getting a credit card approved and being prompt on your payments, you would be able to get a loan in future even though you have a bad credit score.
Prepaid cards are the first option you should consider when you have bad credit rating. With prepaid debit or credit cards, you only spend what you have, and as such you don’t compound a poor financial situation by taking on unsustainable debt.
You can also apply for a bad credit personal loan that allows you consolidate all your debts in one package and pay it at a more reasonable interest rate and tenor. By repaying this personal loan responsibly, you can improve your creditworthiness.
Bad Credit Personal Loans in Australia
Sunshine Short Term Offer
They provide instant approval to borrowers, regardless of credit rating, for up to $2000. You can use the loan to repay your existing loans and gradually make payments at 4% per month. While the fees are high, it is an instant approval loan (within 30 minutes), and you can quickly pay it off to get more reasonable loans in future.
Nimble Short Term Loan
Nimble offers the same conditions as the above. Again, the fees are high, and you should only use it if you are sure you would be able to pay the loan quickly.
Credit24 Short Term Loan
Credit24 offers instant approval for loans of up to $2,000 to Australians, regardless of credit rating. You will have 12 months to pay off the loan at 4 percent per month.
WalletWizard Short Term Loan
WalletWizard offers loans up to one year in tenor, but the yearly costs are up to half of the loan amount.
The options above are all available to people with bad credit on the condition that Centrelink is not your primary source of income.
The other option would be to go for unsecured, guaranteed approval credit cards. They are as follows
Unsecured, Guaranteed Approval Credit Cards In Australia
ANZ First Credit Card
This credit card targets people with no or poor credit history. ANZ issues it without a credit check. Other features include 0% for 18 months on balance transfers and a low $30 annual fee. However, there are high charges if you wish to get a cash advance on the card.
Horizon Credit Union Visa Card
The low rate on this credit card makes it useful for people rebuilding their credit score. You can transfer existing debt from other credit cards to it and apply the low introductory interest rate. It is approved instantly as long as you are a citizen or permanent resident of Australia without any defaults in the last five years.
Citibank Clear Card
Citibank Clear card is an offering from a global financial powerhouse and as such can be a great way to build your credit rating. You can transfer your existing debt on to the card with a $99 fee and pay it off over 14 months at no extra charge.
However, the purchase rate is 13% per annum, and as such, it is only appropriate for paying off your existing debt. After paying off your existing debt, your credit rating would have improved, and you should be able to get less expensive credit cards.
Virgin Australia Velocity Flyer Card
With just a $50 annual fee, you get instant access to the Virgin Australia card. Cardholders can transfer their existing balance to the card and enjoy a 0% interest charge on this balance for 18 months. It is a good way to solve your credit problems by reducing the interest you are paying on existing debt.
It is important that you pay down your existing debt though as after 18 months, you pay as high as 20% on the debt. Also, new purchases on the card carry high rates. It is a card for people looking to improve their credit score by paying down existing debt at lower rates.
Another alternative for people with bad credit in Australia is store cards. Store cards are issued without a credit check and are usable at the store in question. However, the fees are higher and should be paid off every month to avoid accumulating these fees. Some of these store cards include:
Store Credit Cards For Bad Credit In Australia
Myers Credit Card
Myers Credit Card allows you to make credit purchases at Myers’ stores. It is free initially with an annual renewal fee of $69. It is instantly issued upon request. Also, as long as you quickly pay back, it can provide access to funds. And you can use those funds to purchase other items outside of Myers.
Woolworths Qantas Card
The Woolworths card allows you pay less when you shop at Woolworths. Additionally, it provides you with a low credit line to make purchases. The fee upon instant approval is $99, and the annual renewal fee is $169.
David Jones American Express Card
This store card can be used at a variety of supermarkets and petrol stations. The fee is a bit steep at $295 per annum. As an advantage, you are allowed interest-free payments on all David Jones purchases.
You can use Mastercard, AMEX or Visa store cards outside the issuing stores. While they are not able to withdraw cash from an ATM, people with low credit scores can still access funds. It is very important that you pay off your balance monthly. So, whether you are using a store card or a guaranteed approval credit card, financial prudence matters.
If you have bad credit, there are always options for you to get new loans. In this article, we have discussed the credit cards and options available to Australians with low credit score. However, it is important to improve your credit score and get access to better financial resources. In a modern economy, your access to credit is an important aspect of your financial life.