Bad credit, such as late payments, defaults of bankruptcy, can indicate that you have trouble paying off debts. This increases the risk for credit card issuers, both financially and in regards to the governments strict responsible lending obligations.
Getting rejected for credit card also puts a negative mark on your credit report. This means that someone with bad credit who applies for a credit card before fixing their credit problems could end up with a lower credit score. In fact, Finder research has found 21% of Australians who have been declined a credit card said it was due to bad credit.
Step 1: Pay off existing debt. If you've got a loan, outstanding bills or other credit card debt, start making regular repayments. If you're struggling, you could also request a hardship variation. When a lender checks your credit report, regular repayments towards your existing debt will be viewed positively.
Step 2: Start saving. We know it might be easier said than done, but having some savings in the bank shows lenders that you'll be able to repay your credit card in the future.
Step 3: Wait until you meet the eligibility criteria. Most credit cards list an income requirement for approval. If you don't meet that, your application will automatically be rejected. Look for cards with a low minimum-income requirement or wait til you're eligible for the card you want.
Step 4: Get help if you need it. If you're struggling financially, you can speak with a financial counsellor for free by calling 1800 007 007 or through the National Debt Helpline online chat service.
It's always a good idea to check your credit score before applying for a loan or credit card. You might not even be aware that you have bad credit until you check.
You can check your credit score for free through Finder at the link below.
Get your free credit report and credit score
Once you've got your credit score, you can see if there are any issues and take steps to address them. You might even find there's a mistake in the report, such as a debt that doesn't belong to you.
You can get these errors fixed and improve your credit score. But you won't know about them until you check.
You can also check out Finder's DIY credit repair guide for more help.
There are no specific credit cards for people with bad credit. That's part of why it's hard to get approved for a card as a borrower with bad credit.
A better option might be other forms of credit, like a short-term loan or a bad credit personal loan. These products are often designed for borrowers with bad credit.
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